SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 Fee Required
For the fiscal year ended December 31, 1994 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 No Fee Required
For the transition period from to .
Commission file number: 1-170-2
Amoco Corporation
(Exact name of registrant as specified in its charter)
Indiana 36-1812780
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 East Randolph Drive, Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: 312-856-6111
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, without par value New York, Chicago, Pacific,
Toronto, Basel, Geneva,
Lausanne and Zurich Stock
Exchanges
Guarantee of Amoco Company:
8 5/8% Debentures Due 2016 New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days: Yes X
No .
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K: X
Aggregate market value of voting stock held by non-affiliates as of
January 31, 1995, based on a closing price of $58 was approximately
$28,700,000,000.
Number of common shares outstanding as of January 31, 1995, was
495,449,383 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement dated March 13, 1995.
AMOCO CORPORATION
INDEX
Page
PART I
Items 1. and 2. Business and Properties
Exploration and Production . . . . . . . . . . . . . . . . . . 4
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Oil and Gas Sales Commitments . . . . . . . . . . . . . . . . . 11
Refining . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Transportation . . . . . . . . . . . . . . . . . . . . . . . . 12
Marketing of Petroleum Products . . . . . . . . . . . . . . . . 13
Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Other Operations . . . . . . . . . . . . . . . . . . . . . . . 15
Research . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Government Regulation . . . . . . . . . . . . . . . . . . . . . 17
Environmental Protection . . . . . . . . . . . . . . . . . . . 18
Executive Officers of the Registrant . . . . . . . . . . . . . 19
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 20
Item 4. Submission of Matters to a Vote of Security Holders . . . 21
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . 22
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . 23
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . 24
Item 8. Financial Statements and Supplemental Information . . . . 36
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . . . . . . 79
PART III
Item 10. Directors and Executive Officers of the Registrant . . . 79
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . 79
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Item 13. Certain Relationships and Related Transactions . . . . . 79
PART IV
Item 14. Exhibits, Financial Statements Schedules, and Reports on Form
8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
2
AMOCO CORPORATION
_______________
PART I
Items 1. and 2. Business and Properties
Amoco Corporation was incorporated in Indiana in 1889 and has its
principal executive offices at 200 East Randolph Drive, Chicago, Illinois
60601. Amoco Corporation is a parent corporation concerned with overall
policy guidance, financing, coordination of operations, staff services,
performance evaluation and planning for its subsidiaries.
Amoco Corporation and its consolidated subsidiaries (herein
collectively also called "Amoco" or the "Corporation") form a large
integrated petroleum and chemical enterprise. There are three principal
wholly owned subsidiaries. These subsidiaries and the businesses in
which they are engaged are summarized below:
Amoco Production Company . Exploration, development and production
of crude oil, natural gas, and natural
gas liquids, and marketing of natural
gas.
Amoco Oil Company . . . . . Refining, marketing and transporting of
petroleum and related products.
Amoco Chemical Company . . Manufacture and sale of chemical
products.
Amoco Company, a wholly owned subsidiary of Amoco Corporation, is
the holding company for these three subsidiaries and substantially all
other petroleum and chemical operating subsidiaries except Amoco Canada
Petroleum Company Ltd. ("Amoco Canada"), which is wholly owned by Amoco
Corporation. Amoco Corporation has guaranteed the outstanding public
debt obligations of Amoco Company. Summarized financial information
relating to Amoco Company is disclosed in Note 22 to the Consolidated
Financial Statements. Amoco Corporation and Amoco Company have
guaranteed certain debt issues of Amoco Canada. See Note 9 to the
Consolidated Financial Statements.
In 1994, a major restructuring occurred that effectively eliminated
the role of the three principal subsidiaries as operating entities. The
new organization is structured around 17 business groups divided into
three sectors - exploration and production, petroleum products and
chemicals. The Exploration and Production Sector ("E&P") includes U.S.
Operations, International Operations, Canada, Natural Gas, Worldwide
Exploration, Eurasia and E&P Technology. The Petroleum Products Sector
includes Refining, Marketing, Supply and Logistics and International
Business Development. The Chemicals Sector includes Chemical Feedstocks
(aromatics, paraxylene, olefins and styrene), Chemical Intermediates
(purified terephthalic acid ("PTA") and industrial chemicals), Polymers
(polypropylene, polystyrene, engineering polymers and carbon fibers),
Fabrics and Fibers, Foam Products and Development and Diversification.
The sectors generally follow the manner in which business segments are
3
reported. The refining, marketing and transportation business segment
includes the petroleum products sector and the transportation and
wholesale marketing of natural gas liquids ("NGL") and domestic natural
gas.
Selected financial information by industry segment and geographic
area for the three years ended December 31, 1994, is presented in Note 23
to the Consolidated Financial Statements.
WORLDWIDE OPERATIONS
Exploration and Production
Amoco is actively engaged in exploration for oil and gas in onshore
and offshore areas of the United States, Canada and various countries
outside North America. United States offshore efforts are conducted
primarily in the Gulf of Mexico in both shallow and deep water. Foreign
exploration activities are carried out primarily in the Alberta Basin of
Canada, the North Sea (United Kingdom, Norway and the Netherlands), the
Gulf of Suez and Nile delta (Egypt), the Arabian Peninsula (Sharjah, Oman
and Yemen), West Africa (Gabon and Nigeria), Europe (Poland and Romania),
Australia, China, New Zealand, South America (Argentina, Colombia and
Venezuela) and Trinidad.
Amoco's U.S. production of crude oil, condensate, NGL, and natural
gas is principally in the states of Texas, Wyoming, Louisiana, New
Mexico, Colorado, Kansas, Oklahoma and Alaska, and offshore in the Gulf
of Mexico. Principal foreign oil and gas production is located in Egypt,
Trinidad, Canada, Sharjah, United Kingdom, Argentina, the Netherlands and
Norway.
Worldwide net production of liquid hydrocarbons in 1994 was 668,000
barrels per day, 1 percent below 1993. United States liquids production
was 292,000 barrels per day in 1994, 4 percent below 1993. The decrease
in U.S. liquids production primarily reflected normal field declines.
Worldwide net production of natural gas increased 2 percent in 1994. In
the U.S., natural gas production was up 3 percent to 2,520 million cubic
feet per day as a result of increased deliverability and increased
marketing efforts. Amoco's net production of oil and gas for the three
years ended December 31, 1994, which includes applicable volumes produced
4
under service contracts and production sharing agreements in certain
foreign countries, is summarized below:
United
States Canada Europe Other Worldwide
Crude oil and natural gas
liquids* (thousands of
barrels per day)
1994 . . . . . . . . . . 292 73 66 237 668
1993 . . . . . . . . . . 305 84 51 238 678
1992 . . . . . . . . . . 321 89 55 246 711
Natural gas (millions of
cubic feet per day)
1994 . . . . . . . . . . 2,520 821 335 552 4,228
1993 . . . . . . . . . . 2,443 916 259 530 4,148
1992 . . . . . . . . . . 2,388 813 267 500 3,968
*U.S. production includes NGL from processing plants in which Amoco has
an ownership interest of 55, 54 and 60 thousands of barrels per day for
the years 1994, 1993 and 1992, respectively.
At year-end 1994, Amoco owned entirely or had an ownership interest
in 59 natural gas processing plants in the United States, of which it was
the operator for 33.
Amoco continued optimization of production from existing waterflood
and improved oil recovery operations in 1994. These projects are
predominately located in the Permian Basin in West Texas and in Colorado
and Wyoming. Collectively, they account for approximately 65 percent of
Amoco's net U.S. crude and condensate production. In addition to the
eight company-operated carbon dioxide ("CO2") flood projects already in
operation in 1994, Amoco capitalized on existing infrastructure to
initiate a new CO2 flood in the Cedar Lake Field located in the Permian
Basin. Implementation of this project involved the drilling of 32 new
wells and the installation of a pipeline to connect to Amoco's company-
operated Mallet CO2 gas processing plant. First injection of CO2
occurred in August 1994. In an effort to further enhance its Permian
Basin portfolio of waterfloods, Amoco acquired additional working
interest in the North Hobbs Unit and divested its interest in the
Prentice Northeast Unit.
Amoco maintained 1994 production and drilling operations in the U.S.
Gulf of Mexico at approximately the same levels as 1993. During 1994,
Amoco drilled or participated in the drilling of 41 development and
extension wells of which 34 were producers. Of the total wells drilled,
Amoco operated 15.
The development of Amoco's U.S. deep water holdings progressed
substantially during 1994 and included approval of Amoco's participation
in the Ram/Powell project in the Gulf of Mexico. Amoco's share of total
Ram/Powell development expenses, through the project life, is estimated
to be $286 million. First production is expected to occur in late 1997.
Amoco's other deep water prospects are in earlier stages of development.
5
Amoco continues to aggressively drill infill locations in the
Hugoton field in Kansas, and the Red Oak Field in Oklahoma. In 1994, 86
company-operated natural gas wells were drilled in these areas. The
Hugoton and Red Oak fields produced 416 million cubic feet of natural gas
per day in 1994 compared to 400 million cubic feet in 1993. New
agreements have been entered into which could result in substantial
investments in the Hugoton field to develop, gather, process, market and
transport natural gas. Amoco is continuing engineering studies for
construction of a proposed 500 million cubic feet per day NGL processing
plant in the Hugoton field.
In North America in 1994, Amoco continued to increase its efforts in
the marketing of natural gas and the purchase and resale of natural gas
from third parties.
In the United Kingdom, a link was established during 1994 between
the Amoco-operated Central Area Transmission System ("CATS") natural gas
pipeline in the North Sea and the British Gas National Transmission
System. This $17 million link is expected to be operational by the end
of 1995. In addition, work commenced on a $120 million project to
construct additional natural gas processing facilities onshore at
Teesside, England. These two projects represent a continuation of Amoco
(U.K.) Exploration Company's effort to maximize returns on the North Sea
infrastructure assets. The 255-mile CATS pipeline has a capacity in
excess of 1.6 billion cubic feet of natural gas per day, of which
contracts have been concluded for use of 1.2 billion cubic feet per day.
Amoco Argentina Oil Company ("Amoco Argentina") revised its contract
with the former Argentine national oil company, YPF S.A., effective
January 1, 1995. Under the previous contract, Amoco's net production was
35,400 barrels per day, representing 75.6 percent of the total oil
produced. YPF S.A. received the remaining 24.4 percent and was
responsible for all tax liabilities, including Amoco Argentina's. The
revised contract increases Amoco's net production to 44,800 barrels per
day representing 87.8 percent of the total oil produced. This includes
three additional fields, which are expected to produce 4,300 barrels
per day. These fields were added to the contract area yielding a total
production level of 51,000 barrels (gross) per day. In exchange for
the incremental production entitlements, Amoco Argentina assumed
responsibility for tax liabilities previously paid on its behalf by
YPF S.A.
In Sharjah, Amoco and its partners brought the Kahaif natural gas
field on stream, completed a liquified petroleum gas plant expansion
project, and added gas reinjection facilities for a combined cost of $89
million during 1994. Production from the new Kahaif natural gas field
began in June and averaged as much as 200 million cubic feet per day by
the end of the year.
Significant natural gas and condensate reserves were discovered by
the Opon No. 3 well in Colombia. Amoco is the operator and holds a 60
6
percent working interest in the block. A confirmation well is expected
to be drilled in 1995.
In 1994, Amoco Trinidad Oil Company brought the Immortelle gas field
on stream and started development of the Banyan gas field which is
expected to begin production near the end of the first quarter 1995.
Amoco made major natural gas discoveries off the East Coast of Trinidad
and Tobago in 1994. Amoco is actively working to develop a market for
these reserves and is conducting feasibility studies for a liquefied
natural gas facility that will allow monetization of these natural gas
resources in a worldwide market.
Two natural gas discoveries were made offshore Egypt in the Nile
Delta area; six additional wells are expected to be drilled in 1995.
Amoco has entered into an agreement with Egypt and an Italian company to
form the first private natural gas pipeline company to transport natural
gas from the Nile Delta to a growing regional market.
Amoco Orient Petroleum Company commenced development of the Liuhua
Field in 1993 after approval by the People's Republic of China. Amoco is
the operator and has a net working interest of 24.5 percent after a
partnering agreement was approved in early 1994. Estimated cost of
development is $650 million with first production expected in early 1996.
7
Average sales prices (including transfers) and production costs per
unit of oil and gas produced, for the three years ended December 31,
1994, are as follows:
United
States Canada Europe Other
1994
Average sales prices:
Crude oil (per barrel) . . . $14.82 $13.38 $15.49 $14.23
Natural gas liquids (per
barrel) . . . . . . . . . . $ 9.39 $ 8.75 $ -- $ --
Natural gas (per mcf) . . . $ 1.66 $ 1.39 $ 2.23 $ .89
Average production costs (per
equivalent barrel) (1) . . . $ 3.89 $ 3.62 $ 6.62 $ 3.84
1993
Average sales prices:
Crude oil (per barrel) . . . $15.96 $13.94 $17.69 $15.87
Natural gas liquids (per
barrel) . . . . . . . . . . $10.79 $ 9.44 $ -- $ --
Natural gas (per mcf) . . . $ 1.88 $ 1.31 $ 1.97 $ .81
Average production costs (per
equivalent barrel) (1) . . . $ 4.42 $ 3.27 $ 6.43 $ 4.01
1992
Average sales prices:
Crude oil (per barrel) . . . $17.79 $16.19 $18.86 $17.62
Natural gas liquids (per
barrel) . . . . . . . . . . $11.43 $ 9.56 $ -- $ --
Natural gas (per mcf) . . . $ 1.65 $ 1.15 $ 2.06 $ .86(2)
Average production costs (per
equivalent barrel) (1) . . . $ 4.50 $ 4.44 $ 6.65 $ 4.29(2)
(1) Production costs are shown on a dollar-per-barrel basis after
converting natural gas into equivalent barrel units. Natural gas
was converted on the basis of approximate relative energy content.
(2) Excludes effects of natural gas contract settlements; see Note 2 to
the Consolidated Financial Statements.
8
Reported average sales prices represent recorded revenues for oil
and gas production quantities sold or transferred. In some cases,
particularly in overseas areas, recorded revenues reflect adjustments for
royalties, net profits interests, and other contractual provisions.
Accordingly, the reported per barrel figures do not necessarily represent
actual average prices at which sales and transfer transactions occurred.
Production costs include costs involved in lifting oil or gas to the
surface and in gathering, treating, field processing and field storage.
Such costs include operating labor, repairs and maintenance, materials,
supplies and fuel consumed. Also included are operating costs of NGL
plants because Amoco includes the operations of these plants in the
exploration and production business segment.
Data regarding Amoco's exploratory and development drilling
activities during the three years ended December 31, 1994, are summarized
below:
United
States Canada Europe Other Worldwide
1994
Net exploratory wells:
Productive . . . . . . 43 39 -- 11 93
Dry . . . . . . . . . 12 16 8 9 45
Total . . . . . . . . 55 55 8 20 138
Net development wells:
Productive . . . . . . 457 114 2 98 671
Dry . . . . . . . . . 15 14 -- 10 39
Total . . . . . . . . 472 128 2 108 710
Total net wells . . . 527 183 10 128 848
1993
Net exploratory wells:
Productive . . . . . . 29 26 -- 9 64
Dry . . . . . . . . . 6 5 2 11 24
Total . . . . . . . . 35 31 2 20 88
Net development wells:
Productive . . . . . . 238 70 8 66 382
Dry . . . . . . . . . 10 3 1 1 15
Total . . . . . . . . 248 73 9 67 397
Total net wells . . . 283 104 11 87 485
1992
Net exploratory wells:
Productive . . . . . . 27 17 -- 1 45
Dry . . . . . . . . . 52 27 4 20 103
Total . . . . . . . . 79 44 4 21 148
Net development wells:
Productive . . . . . . 313 59 3 97 472
Dry . . . . . . . . . 11 9 -- 1 21
Total . . . . . . . . 324 68 3 98 493
Total net wells . . . 403 112 7 119 641
9
Shown below are wells in process of being drilled at December 31,
1994:
United
States Canada Europe Other Worldwide
Gross wells . . . . . . . 136 7 3 16 162
Net wells . . . . . . . . 68 6 1 11 86
The number of wells owned by Amoco at December 31, 1994, were as
follows:
United
States Canada Europe Other Worldwide
Gross wells owned:
Oil wells . . . . . . . . 22,589 7,295 172 2,302 32,358
Gas wells . . . . . . . . 13,984 1,895 175 70 16,124
Total . . . . . . . . . 36,573 9,190 347 2,372 48,482
Net wells owned:
Oil wells . . . . . . . . 8,213 3,216 43 2,288 13,760
Gas wells . . . . . . . . 8,078 747 68 48 8,941
Total . . . . . . . . . 16,291 3,963 111 2,336 22,701
Multiple completion wells included
above:
Gross wells . . . . . . . 1,523 305 -- -- 1,828
Net wells . . . . . . . . 641 193 -- -- 834
Amoco's proved and unproved acreage holdings, including acreage held
under reservations, permits, options or similar arrangements at December
31, 1994, are summarized below:
United
States Canada Europe Other Worldwide
(thousands of acres)
Gross acres:
Proved . . . . . . . . 5,281 2,340 270 684 8,575
Unproved . . . . . . . 10,830 4,552 7,273 47,238 69,893
Reservations, permits,
options, etc . . . . . 133 4,367 -- -- 4,500
Total . . . . . . . . 16,244 11,259 7,543 47,922 82,968
Net acres:
Proved . . . . . . . . 2,315 1,426 78 313 4,132
Unproved . . . . . . . 4,308 2,634 3,390 29,007 39,339
Reservations, permits,
options, etc . . . . . 66 3,329 -- -- 3,395
Total . . . . . . . . 6,689 7,389 3,468 29,320 46,866
10
Reserves
This section should be read in conjunction with data on reserves
presented in "Supplemental Information" to the Consolidated Financial
Statements.
Amoco replaced 128 percent of its production on an oil-energy
equivalent basis during 1994. Excluding the sale and purchase of
properties, which primarily involved sales of interests in Norway,
Canada, and a partial sale of interest in China, the production
replacement rate was 133 percent. The tables on pages 75 and 76 set
forth by geographic area net proved reserves as of December 31, 1994,
1993, 1992, and 1991 including reserves in which Amoco holds economic
interest under production sharing and other types of operating agreements
with foreign governments. Adding to 1994 reserves were major discoveries
in the Gulf of Mexico, Trinidad, the North Sea, and Colombia plus
extensions in Canada, the United States, and Egypt. Improved recovery
additions in Egypt, and West Texas enhanced recovery projects were also
significant. Upward revisions of reserves also occurred in Trinidad and
Egypt. As of March 1, 1995, no major discovery or significant event has
occurred that would have a material effect on the estimated proved
reserves reported at December 31, 1994.
Shown below are estimated proved reserves as of December 31, 1994
and 1993:
Crude Oil &
NGL Natural Gas
(millions of (billions of
barrels) cubic feet)
Net proved reserves:
December 31, 1994 . . . . . . . . . 2,205 18,521
December 31, 1993 . . . . . . . . . 2,223 17,650
Net proved developed reserves:
December 31, 1994 . . . . . . . . . 1,914 15,538
December 31, 1993 . . . . . . . . . 1,976 15,255
Amoco has been required to file certain oil and gas reserve
information with various governmental agencies and committees, including
the Department of Energy ("DOE"), in connection with a variety of
matters. Reserve estimates furnished to such authorities or agencies
were determined on the same basis as the estimates contained herein,
except for differences in format and definition as prescribed by the
requesting authority.
Oil and Gas Sales Commitments
Amoco sells gas from its producing operations under a variety of
contractual arrangements. Amoco has several gas sales contracts that
specify obligations to make available fixed and determinable quantities.
11
Amoco has 54 such contracts in the United States which, as of December
31, 1994, provide for the potential future delivery over the next three
years of 826 billion cubic feet ("BCF") of natural gas. Amoco expects
this commitment to be fulfilled from proved reserves. Amoco (U.K.)
Exploration Company has a gas contract with Teesside Power Limited which
provides deliveries over a three-year period as of December 31, 1994, of
approximately 57 BCF of natural gas. Amoco expects this commitment to be
fulfilled from reserves currently being developed. Amoco Canada has 12
outstanding natural gas contracts as of December 31, 1994. Over the next
three years, deliveries under these contracts total approximately 350 BCF
of natural gas, which Amoco anticipates will be fulfilled from proved
reserves.
Satisfying Amoco's obligations under sales contracts that specify
fixed and determinable quantities is not expected to have a material
adverse effect on Amoco's operations or earnings. These contracts do not
limit potential gains due to future increases in market prices since
essentially all are based on market postings or an index basis, or are
negotiated annually.
Refining
Amoco owns and operates five refineries in the United States. The
daily operable capacity of these refineries in 1994, is shown below:
Daily
Operable
Location of Refinery Capacity
(barrels)
Texas City, Texas . . . . . . . . . . . . . . . . . . . . . . 433,000
Whiting, Indiana . . . . . . . . . . . . . . . . . . . . . . 400,000
Mandan, North Dakota . . . . . . . . . . . . . . . . . . . . 58,000
Yorktown, Virginia . . . . . . . . . . . . . . . . . . . . . 53,000
Salt Lake City, Utah . . . . . . . . . . . . . . . . . . . . 40,000
Total . . . . . . . . . . . . . . . . . . . . . . . 984,000
Daily U.S. input to crude units averaged 959,000 barrels in 1994,
958,000 barrels in 1993, and 936,000 barrels in 1992. Crude unit
utilization was 97.5 percent in 1994 compared with 96.9 percent in 1993.
Energy efficiency improved in line with long-range energy conservation
plans with consumption declining 11 percent since 1988. Refinery
investments focused on environmental compliance, sustaining reliable
operations and increasing crude flexibility.
Transportation
Amoco operates extensive transportation facilities for crude oil,
refined products, NGL, carbon dioxide and petrochemical feedstocks in the
United States. Crude oil is transported from most of the oil-producing
areas of the continental United States to refining centers in the Rocky
Mountain, midwestern and southwestern states. The crude oil system
delivers directly to 11 refineries, four of which are owned by Amoco.
12
Indirectly, the system serves some 35 refineries of other companies
through connecting common carrier pipelines. In addition, the common
carrier refined petroleum product system is connected to three
refineries. Chemical feedstock lines receive product directly from Amoco
refineries and other Amoco plants, and deliver directly to various
plants. In Canada, NGL are gathered and then transported through a
system of owned, partially owned and common carrier pipelines in Canada
and the northern United States. In total, Amoco's pipeline network in
North America aggregates 17,118 miles, consisting of 2,782 miles of
gathering lines and 14,336 miles of trunk lines. In 1994, shipments
through Amoco's pipelines system in North America totaled 415 million
barrels of crude oil and 388 million barrels of refined products and
feedstocks.
Minority interests are also owned in 10 other common carrier
pipeline companies, including Amoco's 14.3 percent interest in Colonial
Pipeline Company, a common carrier refined products pipeline system which
runs 1,600 miles from near Houston, Texas, to the New York City area, and
its 10.5 percent interest in Endicott Pipeline, a crude oil pipeline
system which runs from the Beaufort Sea to the Trans Alaska Pipeline.
Amoco also owns and leases a number of trucks and railcars which are
used to transport crude oil, raw materials, refined products and
chemicals in the United States.
As of December 31, 1994, Amoco owned four U.S. Flag tug/barges and
bareboat chartered another tug/barge giving Amoco an aggregate of 100
thousand deadweight tonnage ("DWT"). Amoco was also committed under
five-year time charters to three international flag tankers, totaling
approximately 240 thousand DWT. An additional 226 thousand DWT was time
chartered on a short-term basis, of which 42 thousand DWT was for a U.S.
Flag tanker.
Marketing of Petroleum Products
The principal refined products manufactured and marketed by Amoco
are gasolines, jet fuels, diesel fuels, heating oils, asphalt, residual
fuels, motor oils, greases and lubricants and coke. Motor gasolines,
diesel fuels, heating oils and motor oils are sold under various brand
names and trade names, the principal ones of which include the words
AMERICAN, AMOCO, LDO, PERMALUBE and in the midwestern states, STANDARD.
Amoco also sells large quantities of liquefied petroleum gas and NGL.
Amoco also offers convenience merchandise and related services to
motorists.
In the United States, Amoco's marketing of petroleum products is
concentrated in the midwest, east and southeast. Amoco supplies about
9,600 gasoline retail outlets, of which approximately 3,000 are either
owned or leased. While most of these outlets are independently
maintained, a small percentage is directly operated by Amoco. Amoco
continues to reposition its marketing operations by acquisitions, asset
recapitalization and construction of high-volume pumpers while upgrading
and modernizing existing stations. In 1994, Amoco's U.S. refined product
13
sales increased 4 percent over 1993. Sales of gasoline increased 3
percent, while sales of distillates increased 5 percent, compared with
the prior year. Amoco's marketing operations continue to improve
efficiency with further expansion of Electronic Sales Processing,
installation of credit card acceptors in dispensers and debit cards.
In Canada, Amoco is engaged in the wholesale marketing of NGL, which
consists of ethane, propane, butanes and pentanes extracted from natural
gas. The majority of Amoco's NGL is marketed on a wholesale basis under
annual supply contracts which provide for price redetermination based on
prevailing market prices.
Sales volumes of refined products for the three years ended December
31, 1994, are detailed below:
1994 1993 1992
(thousands of barrels per day)
United States:
Gasoline . . . . . . . . . . . . . . 612 597 580
Distillates . . . . . . . . . . . . . 369 350 334
Other products . . . . . . . . . . . 196 184 174
Subtotal . . . . . . . . . . . . . . 1,177 1,131 1,088
Canada . . . . . . . . . . . . . . . . 173 172 169
Other . . . . . . . . . . . . . . . . . 11 9 8
Total . . . . . . . . . . . . . . . 1,361 1,312 1,265
Chemicals
Amoco produces and markets a variety of chemicals, such as aromatic
acids, used in the manufacture of polyester fibers, films and resins;
olefins; polystyrene and styrene monomer used in plastics and synthetic
rubber; polypropylene resins used in molded products, fibers and films;
polypropylene carpet backing, industrial fabrics, staple fiber and
filament yarn; polystyrene foam serving, insulating and packaging
materials; aromatic solvents for the paint industry; trimellitic
anhydride used principally in plasticizers; polybutene used in
lubricating oil additives; and engineering polymers and carbon fibers.
Amoco's principal thermoplastic resins, AMODEL and UDEL, are used in a
variety of markets, including automotive, electronic, business machine
and industrial applications. Amoco's principal North American chemical
and plastic products facilities are located at Alvin, Baytown, Corsicana
and Texas City, Texas; Decatur and Roanoke, Alabama; Beech Island,
Greenville, Rock Hill, Seneca, Spartanburg, and the Cooper River plant
near Mount Pleasant, South Carolina; Rocky Mount and Greensboro, North
Carolina; Malvern, Arkansas; Atlanta, Augusta, Bainbridge, Hazlehurst and
Nashville, Georgia; Joliet, Willow Springs and Wood River, Illinois;
Fresno and La Mirada, California; Yakima, Washington; Afton and
Winchester, Virginia; Chippewa Falls, Wisconsin; Marietta, Ohio; and
Hawkesbury and Brantford, Ontario.
A wholly owned chemical plant at Geel, Belgium manufactures aromatic
acids, PTA, purified isophthalic acid and polypropylene. Facilities for
the fabrication of carpet backing and industrial cloth from polypropylene
14
are located in the United Kingdom, Germany, Australia and Brazil. In
1994, Amoco began construction of a wholly-owned PTA plant in Malaysia,
with annual capacity of 500,000 tons; start-up is expected in the second
half of 1996.
Amoco also holds a 50 percent interest in a fabrics plant in China;
a 50 percent interest in an isophthalic acid plant in Japan; and the
following interests in PTA plants: 49 percent in Brazil; 50 percent in
Taiwan; 35 percent in South Korea; and 9 percent in Mexico. Amoco is
also expanding its joint-venture PTA plants in South Korea and Taiwan by
250,000 tons and 420,000 tons per year, respectively. Completion of
these projects is scheduled for mid-1995.
The following table sets forth trade sales of chemical products for
the three years ended December 31, 1994:
1994 1993 1992
(millions of dollars)
Chemical feedstocks - Aromatics, olefins
and styrene . . . . . . . . . . . . . . $ 628 $ 527 $ 576
Chemical intermediates - PTA, industrial
chemicals and petroleum additives . . 1,842 1,442 1,514
Polymers . . . . . . . . . . . . . . . . . 697 545 526
Fabrics and fibers . . . . . . . . . . . . 936 717 837
Foam products . . . . . . . . . . . . . . . 252 226 233
Other products . . . . . . . . . . . . . . 4 5 7
Total . . . . . . . . . . . . . . . . . $ 4,359 $ 3,462 $ 3,693
Other Operations
Amoco's wholly owned subsidiary, Ecova Corporation ("Ecova"),
formerly Waste-Tech Services, Inc., provides consulting, engineering,
remediation and in-plant services for the petroleum and petrochemical
industries. Ecova announced plans to sell its 45,000-ton-per-year
hazardous-waste incinerator in Nebraska in late 1994; the sale is
expected to close in 1995. Also, in March 1995, Amoco announced that it
will exit the environmental remediation and consulting business. It will
enter negotiations for a possible management buyout of the company. If a
buyout agreement is not reached, the majority of Ecova's operations would
be liquidated or divested. Disposition of these facilities and business
is not expected to have a material effect on revenues, depreciation or
income.
Amoco has a wholly owned real estate subsidiary, AmProp Inc.
("AmProp"), which was formed in late 1988. AmProp was established to
identify ways to enhance the value of Amoco's proprietary real estate
holdings, to realize the value which Amoco occupancy brings to a project
and to develop a portfolio of actively managed real estate investments.
Through a finance company which is wholly owned by Amoco, AmProp has
structured borrowings secured by existing Amoco real estate assets. The
real estate investments have been developed in partnerships with local
15
developers. AmProp is the general partner with a controlling interest in
each venture partnership.
Much of Amoco's high technology new business development is
consolidated into a separate operating subsidiary, Amoco Technology
Company. Currently, the operating company has four areas of major focus:
optoelectronics (lasers), photovoltaics (solar power), DNA-based
diagnostic products and biotechnology-based nutritional products.
One of the wholly owned ventures of Amoco Technology Company is in
the laser industry, making and selling fiber optic based equipment and
systems to the telecommunications industry. Another venture, Solarex,
manufactures and markets both semicrystalline and amorphous silicon
modules that produce electricity directly from sunlight. In January
1995, Amoco and Enron Corporation agreed to form a new general
partnership to continue to manufacture photovoltaic modules and develop
solar powered electric generation facilities. The joint venture,
Amoco/Enron Solar owns the business previously operated by Solarex
Corporation. A separate division, Amoco/Enron Solar Power Development,
assumed the responsibility for development of worldwide power marketing
for projects that produce and sell solar energy.
The remaining three companies owned by Amoco Technology Company are
in the diagnostic and biotechnology-based nutritional products areas.
One develops and sells diagnostic products based on nucleic acid probes;
another manufactures analytical instruments and re-agents used in genetic
engineering research; and a third has developed supplements for animal
nutrition.
During 1994, Amoco Technology Company sold IntelliGenetics, which
develops and sells DNA and protein sequence analysis software for genetic
research to Oxford Molecular Group ("OMG"). As part of the sale, Amoco
maintained a 15 percent equity position in OMG. OMG is a leading
European developer of computer-aided molecular design software and
database management systems for use principally by companies in the
fields of pharmaceutical and biotechnology research.
Research
Research operations are conducted at two major research centers. At
Tulsa, Oklahoma, research activities are directed toward new and improved
methods for finding and producing crude oil and natural gas. At
Naperville, Illinois, research is conducted to develop new and enhanced
chemical and petroleum products and processes. These efforts include
improvement of product performance and methods used in the manufacturing
of chemicals and polymers, refining of crude oil and the development of
technology for producing synthetic fuels. Research and development in
support of biotechnology, physical technology and photovoltaics are also
carried out at Naperville, Framingham, Massachusetts, Newtown,
Pennsylvania and Downers Grove, Illinois.
16
Expenditures for research and technology development activities
totaled $255 million in 1994, $292 million in 1993 and $300 million in
1992. An average of 1,382, 1,593 and 1,512 professional employees were
engaged full-time in these activities during 1994, 1993 and 1992,
respectively.
Employees
Amoco had 43,205 employees in its worldwide operations as of
December 31, 1994. Of this total, 35,664 were located in the United
States, with approximately 15 percent represented by various labor
organizations. The remaining 7,541 employees were located in foreign
countries, of which approximately 21 percent were represented by labor
groups.
Competition
All phases of the petroleum and chemical industries, comprising
numerous competitors large and small, are highly competitive, including
the search for and development of new sources of supply; the construction
and operation of crude oil and refined products pipelines; and the
refining, manufacturing, distributing and marketing of petroleum and
chemical products. The petroleum industry also competes with other
industries in supplying energy, fuel and other needs of consumers. Amoco
does not consider one or a small group of competitors to be dominant in
the industries in which it competes. Amoco is the largest corporate
producer of natural gas in the United States, and it is the largest
private owner of natural gas reserves in North America. Amoco believes
that it ranked eighth in crude oil and natural gas liquids production in
the United States in 1994. During 1994, Amoco marketed about 7 percent
of the refined products sold in the United States. Amoco sells refined
products in 30 states. Amoco was also active in approximately 40
countries. Amoco is among the largest U.S. chemical companies in terms
of sales revenues. Amoco is the world's largest manufacturer of PTA,
with annual capacity of 4.1 million metric tons, including joint
ventures. Amoco is also the world's leading manufacturer of paraxylene
with annual production capacity of 1.3 million metric tons. In addition,
the discussion on pages 4-16 of this Form 10-K discloses more detailed
information on product markets included in the various segments of
Amoco's operations.
Government Regulation
Petroleum industry activities have been, and in the future may be,
affected from time to time by political developments, both foreign and
domestic, and federal, state and local laws, regulations and decrees,
such as restrictions on production, imports and exports, crude oil and
products allocation and rationing, price controls, tax increases and
retroactive tax claims, expropriation of property, cancellation of
contract rights and environmental protection controls. The likelihood of
such occurrences and their overall effect upon Amoco vary from country to
country and are not predictable.
The DOE and the Federal Energy Regulatory Commission ("FERC") have
jurisdiction over Amoco's common carrier pipelines engaged in the
interstate transportation of oil. The Interstate Commerce Act requires
17
Amoco to file tariffs showing all rates, charges and regulations for
movements through its common carrier pipeline system. FERC has the
authority to establish rates for regulated movements. Various state
agencies also regulate Amoco's common carrier pipelines engaged in the
intra-state transportation of oil.
An excise tax, commonly known as the Superfund tax, became effective
on January 1, 1987. This tax is imposed to finance an $11.97 billion
hazardous substance cleanup program. The tax consists of four parts:
(1) a petroleum tax, imposed at a rate of 9.7 cents per barrel for
domestic crude received at U.S. refineries and imported petroleum
products (including crude oil). In addition, the Oil Spill Liability
Trust Fund Tax became effective January 1, 1990. This tax, which is
imposed at the rate of 5 cents per barrel and is an additional part of
the petroleum tax portion of the Superfund tax imposed upon domestic
crude and imported petroleum products (including crude oil), was
suspended effective July 1, 1993; (2) a chemical feedstock tax, imposed
at a rate of up to $4.87 per ton for taxable chemicals. Effective
January 1, 1989, certain taxable substances, which are manufactured from
chemicals subject to the chemical feedstock tax, are taxable on imports
into the United States. On export, these substances are eligible for a
credit or refund of the chemical feedstock tax paid on chemicals used in
their manufacture; (3) a broad-based environmental tax, imposed at a rate
of .12 percent of a corporation's "modified alternative minimum taxable
income" in excess of $2 million as computed under the Tax Reform Act of
1986. This tax applies regardless of whether a taxpayer has any
alternative minimum tax liability, and is scheduled to expire on January
1, 1996; and (4) an underground storage tank tax, which is imposed at a
rate of .1 cent per gallon of gasoline and certain other fuels, and is
scheduled to expire on January 1, 1996.
Environmental Protection
Federal, state and local environmental, health and safety laws and
regulations continue to grow in both number and complexity, presenting
Amoco and the industry with new challenges in attaining and maintaining
compliance. This trend is also reflected in the international arena
where Amoco has targeted new growth opportunities. Public concern about
environmental quality and potential health risks are driving forces
behind many new requirements. The activities of natural resource
companies like Amoco are increasingly affected by these initiatives.
Amoco's operations face stricter controls on releases of pollutants
to the air, water, soil and ground water. Process equipment and
pollution control devices continue to be upgraded, or new controls added,
to comply with these standards. Waste handling and treatment strategies
have been adopted to deal with restrictions on the land disposal of
certain hazardous wastes, the liabilities imposed by federal and state
waste handling and disposal laws and increasingly stringent wastewater
treatment requirements. Remediation of contaminated sites under the
Resource Conservation and Recovery Act, the federal Superfund law, and
similar state laws is ongoing and will continue for the foreseeable
future. Amoco has conducted environmental reviews of many refineries,
18
distribution facilities, services stations, oil and gas operations and
other sites, and numerous projects are underway or completed to address
the contamination found. Amoco's refining and marketing operations
continue to adapt to current and future reformulated gasoline
requirements under clean air laws.
Amoco engages in a wide variety of activities as part of its
commitment to environmental stewardship. Amoco has a program that
conducts environmental, health and safety audits of facilities. The
Crisis Management Plan seeks to provide prompt and effective responses to
emergencies. Amoco has in place many worker health and safety programs.
Amoco's International Standard of Care sets performance standards or
goals that apply to Amoco's diverse operations.
Amoco's 1994 capital expenditures for existing environmental
regulations totaled $198 million. This sum excluded $479 million related
to operating costs and amounts spent on research and development, and
$119 million of mandated and voluntary spending charged against the
remediation liability. Mandated and voluntary spending charged against
the remediation liability in 1995 is expected to approximate the 1994
level. Capital expenditures in the environmental area are expected to
approximate $180 million in both 1995 and 1996.
Executive Officers of the Registrant
Certain information required by Item 10 with respect to executive
officers is incorporated by reference to pages 3-10 of Amoco's Proxy
Statement dated March 13, 1995. The following table sets forth
information concerning other executive officers of Amoco as of March 1,
1995:
Served as
Officer
Name Principal Occupation Age Since
R. Wayne Anderson . .Senior vice president, human resources 53 1986
John L. Carl . . . .Executive vice president and chief financial 47 1991
officer
James E. Fligg . . .Executive vice president, chemicals sector 58 1991
L. Richard Flury . .Senior vice president, shared services 47 1994
W. Douglas Ford . . .Executive vice president, petroleum products 51 1992
sector
William G. Lowrie . .Executive vice president, exploration and 51 1990
production sector
John R. Reid . . . .Vice president and controller 52 1991
George S. Spindler .Senior vice president and general counsel 57 1989
An officer holds office until his or her resignation, removal,
death, retirement or termination of employment with Amoco. All executive
officers, with the exception of John L. Carl, have been employed by Amoco
or its subsidiaries for more than five years. John L. Carl was elected
Executive Vice President and Chief Financial Officer effective April 1,
1994. From October 1993 to April 1994, he was Senior Vice President
19
Finance and Controller of Amoco Corporation. Prior to that time, John L.
Carl was Vice President and Controller of Amoco Corporation, elected
effective February 1, 1991. From 1989 until joining Amoco, John L. Carl
was Vice President and Chief Financial Officer for National Computer
Systems in Minneapolis, Minnesota. From 1986 to 1989, John L. Carl was
Vice President and Controller for Kraft, Inc., based in Glenview,
Illinois.
James E. Fligg was elected Executive Vice President in June 1993.
His title changed to Executive Vice President, Chemicals Sector effective
July 1, 1994. He was named President of Amoco Chemical Company in July
1991. From 1989 to 1991, James E. Fligg was Executive Vice President of
Amoco Chemical Company. L. Richard Flury was elected Senior Vice
President, Shared Services in July 1994. Shared Services consists of
eight departments: information technology; facilities and services;
business services; environment, health and safety; purchasing; analytical
services; public and government affairs; and government relations. From
1993 until July 1994 he was both Chairman of Amoco Orient Company and
Project Manager for an extensive study of Amoco's corporate support
groups. L. Richard Flury served as Executive Vice President of Amoco
Chemical Company from February 1991 to March 1993 and as Senior Vice
President, Worldwide Exploration for Amoco Production Company from
October 1989 to February 1991.
W. Douglas Ford was elected Executive Vice President in June 1993.
His title changed to Executive Vice President, Petroleum Products Sector
effective July 1, 1994. He was named President of Amoco Oil Company in
July 1992. From February 1991 to 1993, W. Douglas Ford was Executive
Vice President of Amoco Oil Company. From July 1990 to January 1991, he
was Vice President of Operations, Planning and Transportation of Amoco
Oil Company. In 1989, W. Douglas Ford was Regional Production Manager
for Amoco Production Company in Denver. William G. Lowrie was elected
Executive Vice President in June 1993. His title changed to Executive
Vice President, Exploration and Production Sector effective July 1, 1994.
He was named President of Amoco Production Company in July 1992. In
1990, William G. Lowrie was President of Amoco Oil Company. From 1987 to
1990, he was Executive Vice President of Amoco Production Company.
Except as previously described, others shown in the above table, who have
been officers less than five years, served in substantially the same
position but were not officers or had different officer titles.
Item 3. Legal Proceedings
Eleven proceedings instituted by governmental authorities are
pending or known to be contemplated against Amoco and certain of its
subsidiaries under federal, state and local environmental laws, each of
which could result in monetary sanctions in excess of $100,000. No
individual proceeding is, nor are the proceedings as a group, expected to
have a material adverse effect on Amoco's liquidity, consolidated
financial position or results of operations. Amoco estimates that in the
aggregate the monetary sanctions reasonably likely to be imposed from
these proceedings amount to approximately $5.4 million.
20
The Internal Revenue Service ("IRS") has challenged the application
of certain foreign income taxes as credits against the Corporation's U.S.
taxes that otherwise would have been payable for the years 1980 through
1989. On June 18, 1992, the IRS issued a statutory Notice of Deficiency
for additional taxes in the amount of $466 million, plus interest,
relating to 1980 through 1982. The Corporation has filed a petition in
the U.S. Tax Court contesting the IRS statutory Notice of Deficiency.
Trial on the matter is scheduled to commence in April 1995. A comparable
adjustment of foreign tax credits for each year has been proposed for the
years 1983 through 1989 based upon subsequent IRS audits. Similar
challenges could arise relating to years subsequent to 1989. The
Corporation believes that the foreign income taxes have been reflected
properly in its U.S. federal tax returns. The Corporation is confident
that it will prevail in the litigation. Consequently, this dispute is
not expected to have a material adverse effect on the liquidity, results
of operations, or the consolidated financial position of the Corporation.
On January 21, 1994, a judgment was entered by the Superior Court of
the State of California, County of Los Angeles, in favor of Amoco
Chemical Company and Amoco Reinforced Plastics Company, subsidiaries of
Amoco, against certain underwriters at Lloyd's of London and various
other British and European insurance carriers, in AMOCO CHEMICAL COMPANY,
et al, vs. CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, et al. In that
case Amoco alleged that the defendant insurers wrongfully refused to pay
for the defense and settlement of product liability lawsuits arising from
Amoco Reinforced Plastics Company's manufacture of irrigation and sewer
pipe in the 1970's. Judgment was entered for $36 million in compensatory
damages and $377 million in punitive damages. Motions for a new trial and
judgment notwithstanding the verdict filed by the defendants have been
denied. The trial court entered a remittitur (reduction) of the punitive
damages to $71 million. A modified judgment reflecting the remittitur
was entered on April 15, 1994, in the amount of $110 million. The
defendants have filed an appeal. Accordingly, it is impossible at this
time to predict the ultimate outcome of this case, however, it is not
expected to have a material effect on the liquidity or consolidated
financial position of Amoco.
Amoco has various other suits and claims pending against it among
which are several class actions for substantial monetary damages which in
Amoco's opinion are not meritorious. While it is impossible to estimate
with certainty the ultimate legal and financial liability in respect to
these other suits and claims, Amoco believes that, while the aggregate
amount could be significant, it will not be material in relation to its
liquidity or its consolidated financial position.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
quarter ended December 31, 1994.
21
__________________________
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The principal public trading market for Amoco common stock is the
New York Stock Exchange. Amoco common stock is also traded on the
Chicago, Pacific, Toronto, and four Swiss stock exchanges. The following
table sets forth the high and low share sales prices of Amoco common
stock as reported on the New York Stock Exchange and cash dividends paid
for the periods presented.
Market Prices Cash
Dividends
High Low Per Share
1994
First quarter . . . . . . . . . $ 56 1/8 $ 50 7/8 $ .55
Second quarter. . . . . . . . . $ 60 $ 51 1/8 $ .55
Third quarter . . . . . . . . . $ 61 1/4 $ 56 3/4 $ .55
Fourth quarter. . . . . . . . . $ 64 1/8 $ 57 1/2 $ .55
1993
First quarter . . . . . . . . . $ 58 1/2 $ 48 1/8 $ .55
Second quarter. . . . . . . . . $ 59 1/4 $ 53 5/8 $ .55
Third quarter . . . . . . . . . $ 58 3/8 $ 52 3/8 $ .55
Fourth quarter. . . . . . . . . $ 59 $ 51 1/2 $ .55
Year-end 1994 and 1993 market prices were $59 1/8 and 52 7/8,
respectively.
Amoco had 134,776 shareholders of record at December 31, 1994.
On January 24, 1995, the board of directors declared a quarterly
cash dividend rate of 60 cents per share, an increase of 5 cents per
share, or 9 percent, over the previous rate.
22
Item 6. Selected Financial Data
The following selected financial data, as it relates to the years
1990 through 1994, have been derived from the consolidated financial
statements of Amoco, including the consolidated statement of financial
position at December 31, 1994 and 1993 and the related consolidated
statement of income and consolidated statement of cash flows for the
three years ended December 31, 1994, and the notes thereto, appearing
elsewhere herein.
1994 1993 1992 1991 1990
(millions of dollars, except per-share
amounts and ratios)
Income statement data--Year
ended
December 31:
Sales and other operating
revenues (excluding
consumer excise taxes) . $ 26,048 $ 25,336 $ 25,280 $ 25,325 $ 28,010
Net income (1) . . . . . $ 1,789 $ 1,820 $ 850 $ 1,173 $ 1,913
Net income per share (1) $ 3.60 $ 3.66 $ 1.71 $ 2.36 $ 3.77
Cash dividends per share $ 2.20 $ 2.20 $ 2.20 $ 2.20 $ 2.04
Ratio of earnings to
fixed charges (2) . . . . 8.9 8.0 3.5 5.0 6.5
Balance sheet data-At
December 31:
Total assets . . . . . . $ 29,316 $ 28,486 $ 28,453 $ 30,510 $ 32,209
Long-term debt . . . . . $ 4,387 $ 4,037 $ 5,005 $ 4,470 $ 5,012
Shareholders' equity . . $ 14,382 $ 13,665 $ 12,960 $ 14,156 $ 14,068
Shareholders' equity per
share . . . . . . . . . . $ 28.97 $ 27.53 $ 26.11 $ 28.52 $ 28.02
(1) Excludes cumulative effects of accounting changes of $(924) million
in 1992, or $(1.86) per share, and $311 million in 1991, or $.62 per
share.
(2) Earnings consist of income before income taxes and fixed charges;
fixed charges include interest on indebtedness, rental expense
representative of an interest factor, and adjustments for certain
companies accounted for by the equity method.
23
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This discussion should be read in conjunction with the consolidated
financial statements and accompanying notes and supplemental information.
1994 1993 1992
(millions of dollars except
per-share amounts)
Income before the cumulative effects of
accounting changes . . . . . . . . . . $ 1,789 $ 1,820 $ 850
Cumulative effects of accounting changes -- -- (924)
Net income (loss) . . . . . . . . . . . $ 1,789 $ 1,820 $ (74)
Income per share before the cumulative
effects of accounting changes . . . . . $ 3.60 $ 3.66 $ 1.71
Net income (loss) per share . . . . . . $ 3.60 $ 3.66 $ (.15)
Consolidated net income for 1994 was $1,789 million, compared with
$1,820 million earned in 1993. A net loss of $74 million was incurred in
1992, after charges of $924 million related to the cumulative effects of
adopting Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
and SFAS No. 109, "Accounting for Income Taxes."
Return on shareholders' equity and return on capital employed were
12.8 and 10.2 percent, respectively, in 1994, compared with 13.7 and 10.6
percent, respectively, in 1993.
Year-to-year comparisons in net income were affected by the unusual
items that are summarized in the table below:
incr./(decr.) net income 1994 1993 1992
(millions of dollars)
Crude oil excise tax settlement . . . $ 270 $ -- $ --
Restructurings . . . . . . . . . . . (256) (170) (805)
Environmental provisions . . . . . . (60) -- --
Gains on dispositions . . . . . . . . 45 190 --
Tax obligations and other . . . . . . 62 60 90
Sharjah natural gas settlement . . . -- -- 90
Earnings in 1994 benefited from settlements of crude oil excise
taxes ("COET") of $270 million, a gain of $45 million related to the
disposition of certain European oil and gas properties and tax
adjustments relating to prior years totaling $62 million. Earnings in
1994 were reduced by charges of $256 million relating to Amoco's
restructuring of operations, as discussed further on pages 31 and 32, and
provisions for future environmental remediation expenditures relating to
past operations totaling $60 million. Earnings for 1993 included gains
of $190 million associated with the disposition of certain Canadian
24
properties and investments, and net tax benefits of $60 million.
Adversely affecting 1993 results were after-tax charges of $170 million
associated with the writedown of Congo exploration and production
operations to current recoverable value. Excluding these items, 1994
earnings were about the same as 1993.
Results of operations in 1994 reflected strong chemical earnings
resulting from higher margins and volumes in major product lines.
Refining, marketing and transportation earnings declined $408 million
mainly because of lower refined product margins. Exploration and
production earnings decreased in 1994 primarily as a result of lower
energy prices.
Sales and other operating revenues totaled $26 billion for 1994, 3
percent higher than the $25.3 billion in 1993, primarily resulting from
increased chemical and natural gas sales volumes, and higher prices for
chemical products.
Costs and expenses on a worldwide basis amounted to $27.9 billion in
1994, 7 percent above 1993. Operating expenses of $4.7 billion were
essentially level with 1993. Current-year restructuring charges of $169
million related to facility closings and dispositions; higher chemical
manufacturing expenses resulting from new plant acquisitions in late
1993; and increased production costs overseas, were offset by the absence
of the $210 million charge in 1993 related to the writedown of Congo
exploration and production operations to current recoverable value.
Exploration expenses increased $104 million primarily related to drilling
activity. Selling and administrative expenses for 1994 were up 20
percent, primarily resulting from second-quarter 1994 restructuring
charges of $225 million related to the severance of approximately 3,800
employees most of which are expected to occur by year-end 1995. Taxes
other than income taxes increased over $500 million, resulting from
higher consumer excise taxes.
1993 vs. 1992
Adjusting for unusual items and accounting changes, 1993 earnings
were 18 percent, or $265 million, above the 1992 level, as a result of
higher refined product margins in refining, marketing and transportation
operations and improved chemical results. Also contributing to the
improvement were higher U.S. natural gas prices and volumes and lower
worldwide exploration and operating expenses.
Costs and expenses totaled $26 billion in 1993, 4 percent lower than
1992. Operating expenses declined primarily reflecting the absence of
1992 restructuring charges of $757 million associated with losses on
asset dispositions, partly offset by 1993 charges of $210 million related
to the writedown of Congo exploration and production operations. The
decline in selling and administrative expense primarily reflected the
absence of 1992 restructuring charges of $457 million mainly related to
severances. Also contributing to the decline in total expenses were
25
lower dry hole costs worldwide, which were $118 million lower than in
1992.
Industry Segments
Results on a segment basis for the five years ended December 31,
1994 are presented below.
1994 1993 1992 1991 1990
(millions of dollars)
Exploration and production
United States . . . . . . . . . . $ 848 $ 811 $ 778 $ 595 $ 861
Canada . . . . . . . . . . . . . . 125 338 (81) 31 57
Europe . . . . . . . . . . . . . . (63) (100) (103) 43 84
Other . . . . . . . . . . . . . 77 (54) 277 140 719
Refining, marketing and transportation 418 826 462 644 370
Chemicals . . . . . . . . . . . . . . 538 240 (94) 68 206
Other operations* . . . . . . . . . . (155) (45) (179) (69) (71)
Corporate . . . . . . . . . . . . . . 1 (196) (210) (279) (313)
Income before the cumulative effects of
accounting changes . . . . . . . . . 1,789 1,820 850 1,173 1,913
Cumulative effects of accounting
changes . . . . . . . . . . . . . . . -- -- (924) 311 --
Net income (loss) . . . . . $ 1,789 $1,820 $ (74) $1,484 $1,913
*Other operations include investments in laser manufacturing,
photovoltaics and biotechnology; offshore contract drilling; interests in
real estate development; and other activities.
U. S. Exploration and Production
1994 1993 1992 1991 1990
Average U.S. selling price
Crude oil
(dollars per barrel) . . . . . $14.82 $15.96 $17.79 $18.31 $21.60
Natural gas liquids
(dollars per barrel) . . . . . 9.39 10.79 11.43 11.69 12.84
Natural gas
(dollars per mcf) . . . . . . . 1.66 1.88 1.65 1.52 1.83
In the United States, the exploration and production segment earned
$848 million in 1994, compared with $811 million in 1993 and $778 million
in 1992. In those years U.S. operations were affected by several items
that are summarized in the table below:
incr./(decr.) earnings 1994 1993 1992
(millions of dollars)
Crude oil excise tax settlement . . . . . $ 90 $ -- $ --
Environmental provisions . . . . . . . . -- (63) --
Tax obligations . . . . . . . . . . . . . -- (25) --
Restructurings . . . . . . . . . . . . . (47) -- (94)
26
Adjusting the respective periods for the items shown, 1994 results
were $94 million below 1993 mainly as a result of lower energy prices.
Also contributing to the decline were lower crude oil production volumes.
Partly offsetting were higher natural gas volumes, lower production
costs, and lower depreciation, depletion and amortization expense.
Amoco's U.S. natural gas prices averaged about $2 per thousand cubic
feet ("mcf") during the first four months of 1994. Prices then declined
throughout much of the remainder of the year, reflecting increased supply
and the impact of mild winter weather on demand.
Amoco's crude oil prices began the year around $12 per barrel and
increased almost $5 per barrel by July, reflecting an improved worldwide
supply-demand balance. Prices declined gradually for the remainder of
the year, averaging $14.82, a decline of more than $1 per barrel compared
with 1993.
U.S. natural gas production averaged 2.5 billion cubic feet per day
in 1994, 3 percent above 1993. Crude oil and natural gas liquids ("NGL")
production averaged 292,000 barrels per day in 1994, 4 percent below
1993. NGL production in 1994 was essentially level with 1993, while
crude oil production declined 6 percent, reflecting normal field
declines.
Non-U.S. Exploration and Production
Operations outside the United States were affected by the items as
shown below.
incr./(decr.) earnings 1994 1993 1992
(millions of dollars)
Gains on dispositions . . . . . . . . . . $ 45 $ 190 $ --
Restructurings . . . . . . . . . . . . . (20) (170) (258)
Sharjah natural gas settlement . . . . . -- -- 90
Norwegian tax legislation . . . . . . . . -- -- (39)
Canadian exploration and production operations earned $125 million
in 1994. In 1993 earnings of $338 million included a gain of $120
million on the sale of 65 percent of Amoco's equity investment in Crestar
Energy Inc. ("Crestar"). Amoco also sold a significant portion of non-
core properties in 1993, benefiting results by $70 million. Excluding
these items, 1994 earnings were $23 million lower than 1993 results,
primarily reflecting lower crude oil and natural gas production volumes.
Also contributing to the decline were higher dry hole costs and other
exploration expenses of $70 million before tax. Partly offsetting were
higher natural gas prices, which were about 6 percent above 1993 levels.
Crude oil and NGL production, and natural gas production averaged 13
percent and 10 percent below the 1993 levels, respectively, primarily
reflecting divestments of non-core Canadian properties.
27
Exploration and production activities in Europe incurred losses of
$63 million in 1994 and $100 million in 1993. Included in 1994 results
was a gain of $45 million on property dispositions. Crude oil and
natural gas production in the North Sea was higher in 1994, following
completion of projects in late 1993. These favorable effects and higher
natural gas prices were partly offset by lower crude oil prices, higher
exploration expenses of $27 million before tax, unfavorable currency
effects of $29 million and higher expenses associated with activity in
Eurasia. Crude and NGL production averaged 66,000 barrels per day in
1994, compared with 51,000 in 1993; natural gas production averaged 335
million cubic feet in 1994, up 29 percent compared with 1993.
Exploration and production operations in other areas earned $77
million in 1994, compared with a loss of $54 million in 1993. Included
in 1993 results were charges of $170 million related to the writedown of
Congo operations to current recoverable value. Exclusive of these
charges, results for 1994 were $39 million below 1993 mainly due to
unfavorable currency effects of $25 million, lower crude oil prices and
charges of $18 million related to the relinquishment of the Myanmar
concession. Partly offsetting were lower exploration expenses and
increased natural gas production, which averaged 552 million cubic feet
per day in 1994, 4 percent higher than 1993, reflecting increased
production in Trinidad. Crude oil and NGL production averaged 237,000
barrels per day in 1994, essentially level with 1993.
1993 vs. 1992
United States exploration and production operations earned $811
million in 1993 compared with $778 million in 1992. Excluding unusual
items, 1993 results were $27 million above 1992 earnings, mainly as a
result of higher natural gas prices and volumes and lower exploration
expenses. Partly offsetting were lower crude oil prices and production
volumes.
In 1993 earnings outside the United States for exploration and
production operations totaled $184 million, compared with $93 million in
1992. The increase in 1993 mainly resulted from gains on the divestment
of a portion of the Crestar shares and other Canadian property
dispositions of $190 million; decreased restructuring charges, which were
$88 million lower in 1993 than in 1992; and the absence of 1992 charges
of $39 million relating to the effects of Norwegian tax legislation.
Partly offsetting were lower crude oil prices, unfavorable currency
effects, higher expenses associated with increased activity in Eurasia
and the absence of the $90 million Sharjah natural gas settlement.
Outlook
Uncertainty and volatility in crude oil and natural gas prices will
continue to affect the oil industry. While results will be influenced by
energy prices, Amoco will benefit from both past and ongoing cost
28
reduction programs. Amoco plans to continue to evaluate and divest
marginal properties and underperforming assets. Amoco's exploration
efforts will continue to target areas that offer the most potential for
adding value. Amoco plans to pursue attractive new business opportunities
worldwide, to adjust its actions to political and socioeconomic
uncertainties, and to capitalize on its extensive natural gas resources.
Refining, Marketing and Transportation
United States 1994 1993 1992 1991 1990
Cents per gallon:
Average selling price
Gasoline . . . . . . . . . . 63.4 66.4 71.3 74.7 83.4
Total refined products . . . 54.5 57.5 60.9 64.9 72.9
Average cost of crude input . . 38.4 39.6 44.6 45.5 55.0
Percent:
Refinery capacity utilization 97.5 96.9 95.3 90.9 91.8
Refinery yield . . . . . . . 107.2 106.8 106.9 106.9 106.3
Worldwide refining, marketing and transportation operations, which
include U.S. petroleum products and Canadian natural gas liquids
activities, earned $418 million for 1994, compared with earnings of $826
million for 1993 and $462 million for 1992. Earnings in 1994 declined
$408 million compared with 1993, primarily due to lower U.S. refined
product margins. Refined product margins decreased almost two cents per
gallon from 1993 levels, resulting in part from a very competitive U.S.
market. Overall selling prices averaged 55 cents per gallon in 1994,
down from 58 cents per gallon in 1993.
Also affecting 1994 earnings were charges of $60 million related to
estimated future cost of environmental remediation activities, and
restructuring charges of $41 million, primarily associated with
severances. Included in 1993 earnings were unusual items favorably
affecting results by $109 million.
Refined product sales volumes in the United States averaged
1,177,000 barrels per day in 1994 compared with 1,131,000 barrels per day
in 1993. Gasoline sales volumes were up 3 percent in 1994 while
distillate sales increased 5 percent.
Refining capacity utilization rate of 98 percent in 1994 compared
with a 1993 utilization rate of 97 percent, reflecting continued
operating efficiencies, despite unexpected disruptions and downtime in
1994.
Canadian supply and marketing activities earned $86 million in 1994,
15 percent below 1993 results, primarily reflecting lower prices for NGL.
Canadian NGL sales volumes of 173,000 barrels per day in 1994 were
essentially level with 1993.
29
1993 vs. 1992
In 1993 earnings of $826 million compared with 1992 earnings of $462
million. The 1993 earnings improvement primarily resulted from higher
refined product margins and lower operating costs.
Outlook
In a highly competitive environment, Amoco's operations are
continually challenged to control costs and improve operating
efficiencies. Amoco's earnings will continue to be affected by price
volatility of crude oil and the overall industry supply-demand balance
for refined products. Amoco will focus on emphasizing Amoco brand
product quality and improving its position as a convenience retailer.
Environmental initiatives, including a commitment to provide a product
slate that is responsive to environmental concerns and regulations, will
require additional investment in refining and marketing facilities.
Amoco will continue to upgrade facilities and improve operating
efficiencies.
Chemicals
Chemical operations earned $538 million for 1994, compared with
earnings of $240 million in 1993 and a loss of $94 million in 1992.
Results for 1994 included restructuring charges of $36 million, primarily
related to severance costs. Adjusting for these charges, 1994 earnings
improved $334 million over 1993 due to higher margins and sales volumes
for major product lines, particularly purified terephthalic acid ("PTA")
and olefins, reflecting strong consumer demand.
Sales volumes for PTA were up 11 percent in 1994, as worldwide
demand for PTA continued to grow. Olefins sales volumes were 14 percent
higher than last year, reflecting strong growth in both domestic and
export demand. The overall chemicals capacity utilization rates were 91
percent in 1994 and 88 percent in 1993.
1993 vs. 1992
In 1993 chemical operations earned $240 million compared with a loss
of $94 million in 1992. Adjusting for $265 million in 1992 restructuring
charges, 1993 earnings were up $69 million over 1992 resulting from the
benefits of cost-containment efforts, restructuring and a strong
worldwide PTA market.
Outlook
Chemical operations are affected by the worldwide economic
environment and the chemical products supply-demand balance. Amoco's
30
earnings will continue to benefit from both past and ongoing process-
improvement and cost-control programs. Amoco will continue to
aggressively develop its international business to capitalize on the
rapidly growing demand for petrochemical products in the international
markets, particularly those in Asia. Amoco also plans to continue to
broaden its current commodity chemical portfolio and looks to diversify
into specialty chemical and polymer conversion businesses.
Other Operations
Other operations include investments in laser manufacturing,
photovoltaics and biotechnology; offshore contract drilling; interests in
real estate development; and other activities.
Other operations incurred a loss of $155 million in 1994, compared
with losses of $45 million and $179 million, respectively, for 1993 and
1992. Included in 1994 losses were restructuring charges of $78 million,
primarily related to the disposition of a hazardous-waste incineration
facility in Kimball, Nebraska. In late 1994, Amoco signed a letter of
intent to sell this facility; the sale is anticipated to close in 1995.
The higher losses in 1994 compared with 1993 also reflected lower
offshore contract drilling revenues. Also, 1993 included gains on the
sale of certain operations as Amoco continued its efforts to review the
strategic fit of these activities. In 1993, the Corporation sold its 49
percent interest in a fertilizer manufacturing venture in Trinidad, and
its interest in Ok Tedi Mining Ltd. in Papua New Guinea. Included in
1992 were charges of $99 million for anticipated losses on the
disposition of non-strategic investments.
Corporate Activities
Corporate activities, including net interest and other corporate
expenses, reported net income of $1 million for 1994, compared with net
expenses of $196 million for 1993 and $210 million in 1992. The 1994
income included interest income of $180 million related to the COET
settlement, favorable tax adjustments relating to prior years of $33
million and restructuring charges of $34 million; the 1993 loss included
prior-year tax benefits of $101 million and losses associated with early
retirement of higher interest-rate debt; and 1992 included favorable
adjustments of $70 million primarily related to revised estimates of tax
obligations and early retirement of debt, and charges of $38 million for
work force reductions. Adjusting for these items over the years shown,
net expense decreased $75 million between 1993 and 1994, primarily
resulting from lower net interest expense and favorable currency effects.
Net expenses increased $11 million between 1992 and 1993.
Restructuring
In July 1994, Amoco announced that the organizational structure of
the Corporation was being changed to improve profitability, increase
31
operating flexibility and position the company for long-term growth. The
Corporation's strategies are now carried out by 17 business groups. A
newly created Shared Services organization provides support services to
the business groups.
Approximately 3,800 positions are expected to be eliminated by year-
end 1995. Additional positions will be eliminated in 1996 as a result of
ongoing process redesign to improve efficiencies in support functions.
In conjunction with the restructuring, an after-tax charge of $256
million was accrued in the second quarter of 1994. Charges against the
accrual associated with severance in 1994, representing approximately
2,000 employees, totaled about $64 million after tax. See Note 2 to the
Consolidated Financial Statements. To date, savings resulting from the
restructuring have not been material. It is anticipated that by 1996
benefits related to lower employment costs and other cost reductions
could approximate $400 million after tax.
Additional costs of approximately $200 million after tax, which have
not been accrued, are expected to be incurred through 1996 to reflect
costs for system redesign, relocations, work consolidation and
development of new processes in support of the reorganization. In 1994,
costs related to these activities were not material. Most of these
additional costs are expected to occur in 1995.
Liquidity and Capital Resources
In 1994, cash flow from operating activities was $4.3 billion,
compared with $3.5 billion in 1993 and $3 billion in 1992.
Total debt was $4.6 billion at year-end 1994. Debt as a percent of
debt-plus-equity was 24.3 percent at December 31, 1994, compared with
27.1 percent at year-end 1993.
Working capital was $1,618 million at year-end 1994, compared with
$751 million at year-end 1993. At year-end 1994, the Corporation's
current ratio was 1.32 to 1 compared with the current ratio at December
31, 1993 of 1.14 to 1. As a matter of policy, Amoco practices asset and
liability management techniques that are designed to minimize its
investment in non-cash working capital. This does not impair operational
capability or flexibility since the Corporation has ready access to both
short-term and long-term debt markets.
Amoco's short-term liquidity position is better than the reported
figures indicate since the inventory component of working capital is
valued in part under the LIFO method whereas other elements of working
capital are reported at amounts more indicative of their current values.
If inventories were valued at current replacement costs, it is estimated
that inventories would have been $1,100 million higher at December 31,
1994. As a result, the level of working capital would rise and an
increase in the current ratio would result.
32
Cash dividends paid in 1994 totaled $1,092 million, or $2.20 per
share. The quarterly cash dividend was raised to 60 cents per share in
January 1995, and increase of 5 cents per share, or 9 percent, over the
previous rate.
In 1994, the Corporation completed a contract with subsidiaries of
Associates Corporation of North America ("Associates") whereby Associates
purchased certain of Amoco's receivables; Associates now issues and
processes Amoco's credit cards. Proceeds from the sale of credit card
receivables were largely used to reduce short-term obligations.
The Corporation believes its strong financial position will permit
the financing of its business needs and opportunities in an orderly
manner. It is anticipated that ongoing operations will be financed
primarily by internally generated funds. Short-term obligations, such as
commercial paper borrowings, give the Corporation the flexibility to meet
short-term working capital and other temporary requirements. At December
31, 1994, bank lines of credit available to support commercial paper
borrowings were $490 million, all of which were supported by commitment
fees. To maintain flexibility, a $500 million shelf registration
statement for debt securities remains on file with the Securities and
Exchange Commission to permit ready access to capital markets.
Amoco is routinely exposed to hydrocarbon commodity price risk. It
manages a portion of that risk mainly through the use of futures and
swaps contracts generally to achieve market prices on specific purchase
and sales transactions. See Note 4 to the Consolidated Financial
Statements. Also during 1994, Amoco used futures and swaps to fix the
sales price of approximately 15 percent of the Corporation's U.S. natural
gas production for the months of April through December, which benefited
earnings by about $20 million after tax.
The Corporation has provided in its accounts for the reasonably
estimable future costs of probable environmental remediation obligations.
These amounts relate to various refining and marketing sites, chemical
locations, and oil and gas operations, including multiparty sites at
which Amoco has been identified as a potentially responsible party by the
U.S. Environmental Protection Agency. Such estimated costs will be
refined over time as remedial requirements and regulations become better
defined. However, any additional costs cannot be reasonably estimated at
this time due to uncertainty of timing, the magnitude of contamination,
future technology, regulatory changes and other factors. Although future
costs could be significant, they are not expected to be material in
relation to Amoco's liquidity or consolidated financial position. In
total, the accrued liability represents a reasonable best estimate of
Amoco's remediation liability. See Notes 1 and 21 to the Consolidated
Financial Statements.
The Corporation and its subsidiaries maintain insurance coverage for
environmental pollution resulting from the sudden and accidental release
of pollutants. Various deductibles of up to $50 million per occurrence
could apply, depending on the type of incident involved. Coverage for
33
other types of environmental obligations is not generally provided,
except when required by regulation or contract. The financial statements
do not reflect any significant recovery form claims under prior or
current insurance coverage.
At December 31, 1994, the Corporation's reserves for future
environmental remediation costs totaled $725 million, of which $467
million related to refining and marketing sites. The Corporation also
maintains reserves associated with dismantlement, restoration and
abandonment of oil and gas properties, which totaled $627 million at
December 31, 1994.
Capital expenditures resulting from existing environmental
regulations, primarily related to refining and marketing sites, totaled
$198 million in 1994. Excluded from that total was $479 million for
operating costs and amounts spent on research and development, and $119
million of mandated and voluntary spending charged against the
remediation liability. Amoco's 1995 estimated capital spending for
environmental cleanup and protection projects is expected to be
approximately $180 million; spending for remediation in 1995 is expected
to approximate the 1994 level.
1994 1993 1992 1991 1990
(millions of dollars)
Capital and exploration expenditures
Exploration and production
United States . . . . . . . . . . . $ 820 $ 669$ 472 $ 965 $1,023
Canada . . . . . . . . . . . . . . 408 275 166 294 285
Europe . . . . . . . . . . . . . . 279 493 538 549 331
Other . . . . . . . . . . . . . . . 687 682 578 690 706
Refining, marketing and
transportation . . . . . . . . . . . 451 685 806 689 617
Chemicals . . . . . . . . . . . . . . 467 370 320 520 582
Other operations . . . . . . . . . . 48 126 60 142 81
Corporate . . . . . . . . . . . . . . 45 46 56 82 89
Total . . . . . . . . . . . . $3,205 $3,346$2,996 $3,931 $3,714
Petroleum exploration expenditures
charged to income (included above)
United States . . . . . . . . . . $ 113 $ 90$ 140 $ 262 $ 230
Canada . . . . . . . . . . . . . . 117 47 72 73 89
Europe . . . . . . . . . . . . . . 178 151 150 144 99
Other . . . . . . . . . . . . . . 225 241 300 311 275
Total . . . . . . . . . . . . $ 633 $ 529$ 662 $ 790 $ 693
Capital and exploration expenditures in 1994 totaled $3.2 billion,
compared with $3.3 billion spent in 1993. Capital and exploration
expenditures of $4.2 billion have been approved for 1995, an increase of
31 percent over 1994 spending. It is expected that more than half of the
spending will go to upstream projects, with about 60 percent of that
amount going to projects outside the United States. Areas outside the
United States where Amoco continues to work on major exploration and
production projects include Egypt, China, the North Sea, Trinidad and the
34
former Soviet Union. Major new expenditures for 1995 also include higher
spending for development of natural gas resources in North America. The
balance of capital outlays is anticipated to be used for chemicals,
refining, marketing and transportation operations, including a
substantial investment in construction of a chemical plant in Malaysia to
produce PTA. It is anticipated that the 1995 capital and exploration
expenditures budget will be financed primarily by funds generated
internally. The planned expenditure level is subject to adjustment as
changing economic conditions may indicate.
35
Item 8. Financial Statements and Supplemental Information
Index to Financial Statements and Supplemental Information Page
Report of Independent Accountants . . . . . . . . . . . . . . . . . . 37
Consolidated Financial Statements:
Consolidated Statement of Income . . . . . . . . . . . . . . . . . 38
Consolidated Statement of Financial Position . . . . . . . . . . . 39
Consolidated Statement of Shareholders' Equity . . . . . . . . . . 40
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . 41
Notes to Consolidated Financial Statements . . . . . . . . . . . . 42
Financial Statement Schedule:
Valuation and Qualifying Accounts (Schedule VIII) . . . . . . . 83
Supplemental Information:
Quarterly Results and Stock Market Data . . . . . . . . . . . . . 69
Oil and Gas Exploration and Production Activities . . . . . . . . 70
Separate financial statements of subsidiary companies not
consolidated, and of 50 percent or less owned companies accounted for by
the equity method, have been omitted since, if considered in the
aggregate, they would not constitute a significant subsidiary.
36
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Amoco Corporation
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the
financial position of Amoco Corporation and its subsidiaries at December
31, 1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994,
in conformity with generally accepted accounting principles. These
financial statements are the responsibility of Amoco Corporation's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
the opinion expressed above.
In 1992, Amoco Corporation changed its method of accounting for
income taxes and for postretirement benefits other than pensions, as
discussed in Notes 15 and 19, respectively, to the financial statements.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 28, 1995
37
AMOCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31
1994 1993 1992
(millions of dollars, except
per-share amounts)
Revenues:
Sales and other operating revenues . . . . . . $ 26,048 $25,336 $25,280
Consumer excise taxes . . . . . . . . . . . . . 3,409 2,824 2,738
Other income . . . . . . . . . . . . . . . . . 905 457 201
Total revenues . . . . . . . . . . . . . . . 30,362 28,617 28,219
Costs and expenses:
Purchased crude oil, natural gas, petroleum
products and merchandise . . . . . . . . . . . 13,558 12,878 12,495
Operating expenses . . . . . . . . . . . . . . 4,743 4,688 5,309
Petroleum exploration expenses, including
exploratory dry holes . . . . . . . . . . . . 633 529 662
Selling and administrative expenses . . . . . . 2,227 1,849 2,319
Taxes other than income taxes . . . . . . . . . 4,153 3,648 3,744
Depreciation, depletion, amortization, and
retirements and abandonments . . . . . . . . . 2,239 2,193 2,440
Interest expense . . . . . . . . . . . . . . . 318 325 247
Total costs and expenses . . . . . . . . . . 27,871 26,110 27,216
Income before income taxes . . . . . . . . . . 2,491 2,507 1,003
Income taxes . . . . . . . . . . . . . . . . . 702 687 153
Income before the cumulative effects of
accounting changes . . . . . . . . . . . . . . 1,789 1,820 850
Cumulative effects of accounting changes . . . -- -- (924)
Net income (loss) . . . . . . . . . . . . . . $ 1,789 $ 1,820 $ (74)
Income per share before the cumulative effects
of accounting changes . . . . . . . . . . . . $ 3.60 $ 3.66 $ 1.71
Cumulative effects of accounting changes . . . -- -- (1.86)
Net income (loss) per share . . . . . . . . . . $ 3.60 $ 3.66 $ (.15)
(The accompanying notes are an integral part of these statements.)
38
AMOCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
December 31
1994 1993
(millions of dollars)
ASSETS
Current Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 166 $ 103
Marketable securities--at cost (all corporate, except
$355 on December 31, 1994, and $221 on December 31,
1993, which represent state and municipal
securities) . . . . . . . . . . . . . . . . . . . . 1,623 1,114
Accounts and notes receivable (less allowances of
$23 on December 31, 1994, and $65 on December 31,
1993) . . . . . . . . . . . . . . . . . . . . . . . 3,180 3,196
Inventories . . . . . . . . . . . . . . . . . . . . 1,042 1,110
Prepaid expenses and income taxes . . . . . . . . . 631 571
6,642 6,094
Investments and other assets:
Investments and related advances . . . . . . . . . . 470 318
Long-term receivables and other assets . . . . . . . 661 705
1,131 1,023
Properties--at cost, less accumulated depreciation,
depletion and amortization of $24,906 on December 31,
1994, and $23,204 on December 31, 1993 . . . . . . . 21,543 21,369
$ 29,316 $28,486
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations . . . . . . $ 24 $ 53
Short-term obligations . . . . . . . . . . . . . . . 224 1,007
Accounts payable . . . . . . . . . . . . . . . . . . 2,759 2,473
Accrued liabilities . . . . . . . . . . . . . . . . 1,162 974
Taxes payable (including income taxes) . . . . . . . 855 836
5,024 5,343
Long-term debt:
Debt . . . . . . . . . . . . . . . . . . . . . . . . 4,387 4,037
Deferred credits and other non-current liabilities:
Income taxes . . . . . . . . . . . . . . . . . . . . 2,961 2,995
Other . . . . . . . . . . . . . . . . . . . . . . . 2,547 2,425
5,508 5,420
Minority interest . . . . . . . . . . . . . . . . . . 15 21
Shareholders' equity:
Common stock (authorized 800,000,000 shares; issued
and outstanding as of December 31, 1994--496,393,067
shares; December 31, 1993--496,401,099 shares) . . 2,166 2,147
Earnings retained and invested in the business . . . 12,223 11,557
Foreign currency translation adjustment . . . . . . (7) (39)
Total Shareholders' Equity . . . . . . . . . . . . . 14,382 13,665
$ 29,316 $28,486
(The successful efforts method of accounting is followed for costs
incurred in oil and gas producing activities.)
(The accompanying notes are an integral part of these statements.)
39
AMOCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Earnings
Retained
and
Invested Foreign
in Currency
Common the Translation
Stock Business Adjustment Total
(millions of dollars, except per-share
amounts)
Balance on December 31, 1991 . . . $ 2,115 $ 12,035 $ 6 $14,156
Net loss . . . . . . . . . . . . (74) (74)
Cash dividends of $2.20 per share (1,091) (1,091)
Foreign currency translation
adjustment . . . . . . . . . . . (27) (27)
Issuances of common stock (net) . 11 (15) (4)
Balance on December 31, 1992 . . . 2,126 10,855 (21) 12,960
Net income . . . . . . . . . . . 1,820 1,820
Cash dividends of $2.20 per share (1,092) (1,092)
Foreign currency translation
adjustment . . . . . . . . . . . (18) (18)
Issuances of common stock (net) . 21 (26) (5)
Balance on December 31, 1993 . . . 2,147 11,557 (39) 13,665
Net income . . . . . . . . . . . 1,789 1,789
Cash dividends of $2.20 per share (1,092) (1,092)
Foreign currency translation
adjustment . . . . . . . . . . . 32 32
Issuances of common stock (net) . 19 (31) (12)
Balance on December 31, 1994 . . . $ 2,166 $ 12,223 $ (7) $14,382
(The accompanying notes are an integral part of these statements.)
40
AMOCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31
1994 1993 1992
(millions of dollars)
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . $ 1,789 $ 1,820 $ (74)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation, depletion, amortization, and
retirements and abandonments . . . . . . 2,239 2,193 2,440
(Increase) decrease in receivables . . . . (137) (18) 476
(Increase) decrease in inventories . . . . 68 (89) 130
Increase (decrease) in payables and
accrued liabilities . . . . . . . . . . . 492 (371) (788)
Deferred taxes and other items . . . . . . (122) (44) (88)
Cumulative effects of accounting changes . -- -- 924
Net cash provided by operating activities 4,329 3,491 3,020
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . (2,572) (2,817) (2,334)
Proceeds from dispositions of property and
other assets . . . . . . . . . . . . . . . 335 594 452
New investments, advances and business
acquisitions . . . . . . . . . . . . . . . (91) (200) (126)
Proceeds from sales of investments . . . . 176 256 8
Other . . . . . . . . . . . . . . . . . . . (18) (2) 18
Net cash used in investing activities . . . (2,170) (2,169) (1,982)
Cash flows from financing activities:
New long-term obligations . . . . . . . . . 438 1,313 3,061
Repayment of long-term obligations . . . . (138) (2,286) (3,147)
Cash dividends paid . . . . . . . . . . . . (1,092) (1,092) (1,091)
Issuances of common stock . . . . . . . . . 29 27 25
Acquisitions of common stock . . . . . . . (41) (32) (29)
Increase (decrease) in short-term
obligations . . . . . . . . . . . . . . . (783) 677 (152)
Net cash used in financing activities . . . (1,587) (1,393) (1,333)
Increase (decrease) in cash and marketable
securities . . . . . . . . . . . . . . . . . 572 (71) (295)
Cash and marketable securities-beginning of
year . . . . . . . . . . . . . . . . . . . . 1,217 1,288 1,583
Cash and marketable securities-end of year . $ 1,789 $ 1,217 $ 1,288
(The accompanying notes are an integral part of these statements.)
41
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
Principles of consolidation
The operations of all significant subsidiaries in which the
Corporation directly or indirectly owns more than 50 percent of the
voting stock are included in the consolidated financial statements. The
Corporation also consolidates its proportionate share of assets,
liabilities and results of operations of oil and gas joint ventures and
undivided interest pipeline companies. Investments in other companies in
which less than a majority interest is held are generally accounted for
by the equity method.
Inventories
Inventories are carried at the lower of current market value or
cost. Cost is determined under the last-in, first-out ("LIFO") method
for the majority of inventories of crude oil, petroleum products and
chemical products. The costs of remaining inventories are determined on
the first-in, first-out ("FIFO") or average cost methods.
Costs incurred in oil and gas producing activities
The Corporation follows the successful efforts method of accounting.
Costs of property acquisitions, successful exploratory wells, all
development costs (including CO2 and certain other injected materials in
enhanced recovery projects) and support equipment and facilities are
capitalized. Unsuccessful exploratory wells are expensed when determined
to be non-productive. Production costs, overhead and all exploration
costs other than exploratory drilling are charged against income as
incurred.
Depreciation, depletion and amortization
Generally, depreciation of plant and equipment, other than oil and
gas facilities, is computed on a straight-line basis over the estimated
economic lives of the facilities. Depletion of the cost of producing oil
and gas properties, amortization of related intangible drilling and
development costs and depreciation of tangible lease and well equipment
are recognized using the unit-of-production method.
The portion of costs of unproved oil and gas properties estimated to
be non-productive is amortized over projected holding periods.
42
The estimated costs to dismantle, restore and abandon oil and gas
properties are recognized over the properties' productive lives on the
unit-of-production method.
Retirements
Upon normal retirement or replacement of facilities, the gross book
value less salvage is charged to accumulated depreciation. Gains or
losses from abnormal retirements or sales are credited or charged to
income.
Maintenance and repairs
All maintenance and repair costs are charged against income, while
significant improvements are capitalized.
Derivative contracts
The Corporation periodically enters into futures, swaps, forwards
and option contracts to manage its exposure to price fluctuations on
hydrocarbon transactions and its exposure to exchange rate fluctuations
on its debt denominated in foreign currencies. Recognized gains, losses
and cash flows from hedge contracts are reported as components of the
related transactions.
Translation of foreign currencies
The U.S. dollar has been determined to be the appropriate functional
currency for essentially all operations except foreign chemical
operations.
Environmental liabilities
The Corporation has provided in its accounts for the reasonably
estimable future costs of probable environmental remediation obligations
relating to current and past activities, including obligations for
previously disposed assets or businesses. In the case of long-lived
cleanup projects, the effects of inflation and other factors, such as
improved application of known technologies and methodologies, are
considered in determining the amount of estimated liabilities. The
liability is undiscounted and primarily consists of costs such as site
assessment, monitoring, equipment, utilities and soil and ground water
treatment and disposal. The estimated environmental remediation
obligation has not been reduced for probable recoveries from third
parties, which are recorded as assets.
43
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Net Income Per Share
Net income per share of common stock is based on the monthly
weighted average number of shares outstanding during the year.
Note 2. Acquisitions, Dispositions and Special Items
In 1994, earnings included benefits of $270 million related to final
settlements with the Internal Revenue Service involving crude oil excise
taxes ("COET") assessed in the 1980s. Of this amount, $180 million
represented interest on the settlements. Earnings also included a gain
of $45 million on the sale of certain European oil and gas properties.
As a result of the organizational restructuring, a charge of $394
million ($256 million after-tax) was accrued in the second quarter of
1994. Included in selling and administrative expenses were charges of
$225 million ($146 million after-tax) related to employee-termination
costs directly associated with the severance of approximately 3,800
employees expected to occur by year-end 1995. Of the 3,800 employees,
approximately 2,000 represent personnel in accounting, information
technology and other related support staff; the remainder are employees
associated with business group operations. Approximately 75 percent of
the total terminations are professionals, managers and supervisors. In
1994, charges against the accrual relating to the elimination of about
2,000 positions totaled $64 million after tax. As of December 31, 1994,
the accrual balance associated with restructuring was $82 million after
tax ($126 million before tax), which was considered adequate for all
future severances to which the company has committed. Included in
operating expenses were charges of $169 million ($110 million after-tax)
related to a reduction in carrying value of assets that will be divested.
Disposition of these assets, including a hazardous-waste incineration
facility that is not yet in commercial production, will not have a
material effect on revenues, depreciation or income.
In 1993, new investments, advances and business acquisitions totaled
$200 million, including the purchase of Phillips Fibers Corporation.
Proceeds from dispositions of property and other assets and from sales of
investments totaled $850 million, including certain non-strategic
properties and investments in Canada for approximately $471 million.
Earnings in 1993 included gains of $120 million relating to the
Corporation's disposition of 65 percent of the equity investment in a
Canadian company, Crestar Energy Inc., in connection with its initial
public offering. Also included were gains of $70 million associated with
the disposition of certain Canadian properties. Earnings in 1993
included after-tax charges of $170 million associated with the writedown
44
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
of Congo exploration and production operations to current recoverable
value.
Earnings in 1992 were reduced by after-tax charges of $805 million,
as part of a strategic reassessment of business operations. These
charges included $473 million for costs of restructuring business units
and related charges, including anticipated losses on the disposition of
oil and gas properties and other non-strategic assets and investments;
$181 million for charges related to work force reductions; and $151
million for other reserves and adjustments. Substantially all of these
restructuring efforts have been completed. Earnings were favorably
affected by $90 million related to the settlement of natural gas
contracts in Sharjah. Also favorably affecting earnings were benefits of
$90 million associated with revised estimates of tax obligations and
retirement of debt.
Note 3. Cash Flow Information
The Consolidated Statement of Cash Flows provides information about
changes in cash and cash equivalents, including cash in excess of daily
requirements that is invested in marketable securities, substantially all
of which have a maturity of three months or less when acquired. The
effect of foreign currency exchange rate fluctuations on total cash and
marketable securities balances was not significant.
Net cash provided by operating activities reflects cash payments for
interest and income taxes as follows:
1994 1993 1992
(millions of dollars)
Interest paid . . . . . . . . . . $ 297 $ 367 $ 550
Income taxes paid . . . . . . . . $ 903 $ 632 $ 974
Note 4. Financial Instruments and Hedging Activities
All financial instruments held by the Corporation are for purposes
other than trading. All derivatives are either exchange traded or with
major financial institutions, and the risk of credit loss is considered
remote. A significant portion of Amoco's receivables are from other oil
and gas and chemical companies. Although collection of these receivables
could be influenced by economic factors affecting these industries, the
risk of significant loss is considered remote.
The carrying values of receivables, payables, marketable securities
and short-term obligations approximate their fair value. The estimated
45
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
fair value of long-term debt outstanding as of December 31, 1994 and 1993
was $4,342 million and $4,264 million, respectively. The estimated fair
value of marketable securities and debt were based on quoted market
prices for the same or similar issues, or the current rates offered to
the Corporation for issues with the same remaining maturities.
The Corporation conducts its business primarily in U.S. dollars.
Significant exposures to foreign currency exchange risk are reduced
through the use of financial instruments, primarily by hedging of foreign
currency borrowings. The following table shows the amount of long-term
debt, including current portions, denominated in foreign currencies as of
December 31, 1994 and 1993, and the face amounts of foreign currency
forward and option contracts that have been designated as hedges of that
debt:
1994 1993
Long-Term Long-Term
Debt Hedge* Debt Hedge*
(millions of U.S. dollars)
British pound sterling . . . . . . $ 596 $ 909 $ 565 $ 873
Canadian dollar . . . . . . . . . . $ 231 $ 348 $ 77 $ 45
* Includes tax effects.
The hedge contracts generally have the same maturities as the
related debt. The carrying value and fair value of the forward and
option contracts were not material at December 31, 1994 and 1993.
The Corporation also enters into futures contracts and forward swaps
to manage its exposure to price fluctuation on hydrocarbon transactions.
The crude oil futures contracts generally match the pricing of specific
purchase transactions to market prices at delivery dates. The net effect
of natural gas futures and swaps is to convert specific sales contracts
from fixed prices to market prices. Natural gas swap contracts
outstanding at December 31, 1994 and 1993 totaled 151 and 24 trillion
British thermal units ("Btus"), respectively. Most contracts are for a
remaining term of less than one year, while contracts representing 43
trillion Btus of natural gas have terms that extend from one to five
years. While these contracts have no carrying value, their fair value,
representing the estimated amount that would have been required to
terminate the swaps at year-end 1994, was an unfavorable $28 million.
46
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In the normal course of business, the Corporation has entered into
contracts for the purchase of transportation capacity, materials and
services over terms of up to 20 years. The remaining minimum payments
required under these contracts at December 31, 1994, totaled $709
million. At December 31, 1994, contingent liabilities of the Corporation
included guarantees of $54 million on outstanding loans of others. The
Corporation also has entered into various pipeline throughput and
deficiency contracts with affiliated companies. These agreements
supported an estimated $7 million of affiliated company borrowings at
December 31, 1994. The fair value of these commitments is immaterial.
Note 5. Inventories
Inventories at December 31, 1994 and 1993, are shown in the
following table:
December 31
1994 1993
(millions of
dollars)
Crude oil and petroleum products . . . . . . . $ 349 $ 415
Chemical products . . . . . . . . . . . . . . . 375 377
Other products and merchandise . . . . . . . . 24 21
Materials and supplies . . . . . . . . . . . . 294 297
Total . . . . . . . . . . . . . . . . . . . . $ 1,042 $ 1,110
During the year ended December 31, 1993, the Corporation reduced
certain inventory quantities which were valued at lower LIFO costs
prevailing in prior years. The effect of this reduction was to increase
net income by approximately $50 million. The similar effect in 1994 was
not material.
Inventories carried under the LIFO method represented approximately
51 percent of total year-end inventory carrying values in 1994 and 47
percent in 1993. It is estimated that inventories would have been
approximately $1,100 million higher than reported on December 31, 1994,
and approximately $900 million higher on December 31, 1993, if the
quantities valued on the LIFO basis were instead valued on the FIFO
basis.
47
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 6. Property, Plant and Equipment
Investment in properties at December 31, 1994 and 1993, detailed by
industry segment, was as follows:
December 31
1994 1993
Gross Net Net
(millions of dollars)
Exploration and production:
United States . . . . . . . . . . $ 15,559 $ 6,957 $ 6,935
Non-U.S. . . . . . . . . . . . . 13,771 5,037 5,008
Refining, marketing and
transportation . . . . . . . . . . 9,940 5,654 5,797
Chemicals . . . . . . . . . . . . . 5,727 2,956 2,668
Other operations . . . . . . . . . 752 534 546
Corporate . . . . . . . . . . . . . 700 405 415
Total . . . . . . . . . . . . . $ 46,449 $ 21,543 $ 21,369
Note 7. Short-Term Obligations
Amoco's short-term obligations consist of notes payable and
commercial paper. Notes payable as of December 31, 1994, totaled $7
million at an average annual interest rate of 5.7 percent, compared with
$71 million at an average annual interest rate of 3.2 percent at year-end
1993. Commercial paper borrowings at December 31, 1994, were $217
million at an average annual interest rate of 5.9 percent compared with
$936 million at an average annual interest rate of 3.4 percent as of
December 31, 1993.
Bank lines of credit available to support commercial paper
borrowings of the Corporation amounted to $490 million at both December
31, 1994 and 1993. All of these were supported by commitment fees.
The Corporation also maintains compensating balances with a number
of banks for various purposes. Such arrangements do not legally restrict
withdrawal or usage of available cash funds. In the aggregate, they are
not material in relation to total liquid assets.
Note 8. Accounts Payable
Accounts payable at December 31, 1994 and 1993, included liabilities
in the amount of $306 million and $304 million, respectively, for checks
48
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
issued in excess of related bank balances but not yet presented for
collection.
Note 9. Long-Term Debt
Amoco's long-term debt resides principally with two Amoco
subsidiaries--Amoco Company and Amoco Canada. Amoco Company functions as
the principal holding company for substantially all of Amoco's petroleum
and chemical operations, except Canadian petroleum operations and
selected other activities.
49
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The components of long-term debt and year-end rates are summarized
as follows:
December 31
1994 1993
(millions of
dollars)
Amoco Company
8 5/8% Debentures due 2016 . . . . . . . . . . . $ 52 $ 102
9 3/4% Debentures due 2016 . . . . . . . . . . . 58 78
9 7/8% Debentures due 2016 . . . . . . . . . . . 25 25
Environmental and other industrial development
obligations . . . . . . . . . . . . . . . . . . . 649 619
U.K. Loans-6.7% Sterling(1) . . . . . . . . . . . 596 565
-5.6% U.S. dollar(1) . . . . . . . . . 195 195
Other indebtedness . . . . . . . . . . . . . . . 535 435
Subtotal . . . . . . . . . . . . . . . . . . . 2,110 2,019
Less current maturities . . . . . . . . . . . . . 24 52
Total Amoco Company . . . . . . . . . . . . . . 2,086 1,967
Amoco Canada
6 3/4% Debentures due 2005 . . . . . . . . . . . 299 299
7 1/4% Notes due 2002 . . . . . . . . . . . . . . 299 299
6 3/4% Debentures due 2023 . . . . . . . . . . . 296 296
7.95% Debentures due 2022 . . . . . . . . . . . . 296 296
7 1/4% Notes due 2002 . . . . . . . . . . . . . . 254 254
7 3/8% Subordinated Exchangeable Debentures (SEDs)
due 2013(2) . . . . . . . . . . . . . . . . 458 457
Other . . . . . . . . . . . . . . . . . . . . . . 35 36
Subtotal . . . . . . . . . . . . . . . . . . . 1,937 1,937
Less current maturities . . . . . . . . . . . . . -- --
Total Amoco Canada . . . . . . . . . . . . . . 1,937 1,937
Other subsidiaries (less current maturities) . . . 364 133
Total long-term debt . . . . . . . . . . . . . . . $ 4,387 $ 4,037
(1)Weighted average interest rate at December 31, 1994.
(2)The SEDs are exchangeable for Amoco common stock at $52.50 per share.
Amoco Corporation guarantees the outstanding public debt obligations
of Amoco Company. Amoco Corporation and Amoco Company guarantee the
notes and debentures of Amoco Canada, except for the SEDs.
AmProp Inc., a real estate subsidiary, had long-term debt secured by
real estate assets, totaling $61 million at year-end 1994, and $88
million at year-end 1993, which is not guaranteed by Amoco Corporation or
Amoco Company.
50
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Annual maturities of total long-term debt during the next five
years, including the portion classified as current, are $24 million in
1995, $720 million in 1996, $211 million in 1997, $247 million in 1998
and $134 million in 1999.
Note 10. Capital Stock
There were 800,000,000 shares of common stock without par value
authorized at December 31, 1994. Details concerning share transactions
are shown below:
1994 1993 1992
Shares Amount Shares Amount Shares Amount
(thous) (mil) (thous) (mil) (thous) (mil)
Net shares on
Jan. 1 . . . . . 496,401 $ 2,147 496,303 $ 2,126 496,335 $ 2,115
Stock repurchases (771) (10) (686) (6) (733) (14)
Sales and
distributions
under employee
benefit plans,
etc. . . . . . . 763 29 784 27 701 25
Net shares
outstanding on
December 31 . . . 496,393 $ 2,166 496,401 $ 2,147 496,303 $ 2,126
In addition, there are 50 million shares of voting preferred stock
and 50 million shares of non-voting preferred stock authorized. As of
December 31, 1994, none of the preferred stock had been issued.
Note 11. Leases
The Corporation leases various types of properties, including
service stations, tankers, buildings, railcars and other facilities, some
of which are subleased to others, through operating leases. Some of the
leases and subleases provide for contingent rentals based on refined
product throughput.
51
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Summarized below as of December 31, 1994, are future minimum rentals
payable and related sublease rental income for operating leases.
Rentals Rental
Payable Income
(millions of
dollars)
1995 . . . . . . . . . . . . . . . . $ 191 $ 167
1996 . . . . . . . . . . . . . . . . 163 100
1997 . . . . . . . . . . . . . . . . 146 45
1998 . . . . . . . . . . . . . . . . 135 7
1999 . . . . . . . . . . . . . . . . 126 4
After 1999 . . . . . . . . . . . . . 487 28
Total minimum rentals . . . . . . . $ 1,248 $ 351
Rental expense and related rental income applicable to operating
leases for the three years ended December 31, 1994, are summarized below:
1994 1993 1992
(millions of dollars)
Minimum rental expense . . . . . . . . . . $ 252 $ 229 $ 253
Contingent rental expense . . . . . . . . . 19 16 23
Total . . . . . . . . . . . . . . . . . . 271 245 276
Less--Related rental income . . . . . . . . 172 84 85
Net rental expense . . . . . . . . . . . $ 99 $ 161 $ 191
Note 12. Foreign Currency
A foreign currency gain of $24 million was reflected in income in
1994, compared with gains of $47 million and $129 million for 1993 and
1992, respectively. In addition, a net translation gain of $32 million
in 1994, and net translation losses of $18 million and $27 million for
1993 and 1992, respectively, were reflected in the foreign currency
translation adjustment account in shareholders' equity.
52
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 13. Interest Expense
The Corporation capitalizes interest cost related to the financing
of major projects under development. All other interest is expensed as
incurred. The components of interest expense are summarized in the
following table:
1994 1993 1992
(millions of dollars)
Short-term obligations . . . . . . . . $ 19 $ 14 $ 13
Long-term obligations . . . . . . . . . 269 285 320
Total external financing . . . . . . 288 299 333
Other interest expense . . . . . . . . 30 39 (67)
318 338 266
Less--capitalized interest . . . . . . -- 13 19
Net interest expense . . . . . . . . $ 318 $ 325 $ 247
Note 14. Research and Development Expenses
Research and development costs are expensed as incurred and amounted
to $255 million in 1994, $292 million in 1993 and $300 million in 1992.
53
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 15. Taxes
Effective January 1, 1992, the Corporation adopted SFAS No. 109.
The cumulative effect was to increase deferred income tax liabilities as
of January 1, 1992, and reduce net income by $68 million ($.14 per
share). Also, 1992 net income before the cumulative effect was $215
million ($.43 per share) greater than it would have been under the
previous method.
The aggregate federal and foreign deferred income tax balance
represents the tax effect of the following items at December 31:
1994 1993
(millions of dollars)
Tax credit and loss carryforwards . . . . . . $ 912 $ 630
Exploration costs . . . . . . . . . . . . . . 304 286
Postretirement benefits . . . . . . . . . . . 516 503
Environmental costs . . . . . . . . . . . . . 387 380
Other . . . . . . . . . . . . . . . . . . . . 578 507
Gross deferred tax assets . . . . . . . . . . 2,697 2,306
Deferred tax asset valuation allowance . . . (720) (573)
Net deferred tax assets . . . . . . . . . . . $ 1,977 $ 1,733
Accelerated depreciation . . . . . . . . . . $ 3,403 $ 3,367
Intangible drilling costs . . . . . . . . . . 707 679
Other . . . . . . . . . . . . . . . . . . . . 340 289
Deferred tax liabilities . . . . . . . . . . $ 4,450 $ 4,335
The increase in the deferred tax asset valuation allowance primarily
reflects an increase in foreign tax credit carryforwards for which
realization is considered unlikely.
54
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The provision for income taxes is composed of:
1994 1993 1992
(millions of dollars)
Federal--current . . . . . . . . . . . $ 392 $ 104 $ 326
--deferred . . . . . . . . . . . (74) 162 (366)
Foreign--current . . . . . . . . . . . 422 479 533
--deferred . . . . . . . . . . . (47) (77) (370)
State and local . . . . . . . . . . . . 9 19 30
$ 702 $ 687 $ 153
The following is a reconciliation between the provision for income
taxes and income taxes determined by applying the federal statutory rate
to income before income taxes:
1994 1993 1992
Percent Percent Percent
of of of
Amount Pre-Tax Amount Pre-Tax Amount Pre-Tax
(millions) Income (millions) Income (millions) Income
Pretax income:
U.S. source . . . . . $ 1,738 $ 1,553 $ 613
Foreign source . . . 753 954 390
$ 2,491 $ 2,507 $ 1,003
Theoretical U.S. income
tax . . . . . . . . . . $ 872 35.0 $ 878 35.0 $ 341 34.0
Increase (reduction) due
to:
Foreign taxes at rates
in excess of U.S. rate 120 4.8 92 3.7 125 12.4
Effect of foreign
currency gains/losses . (9) (.3) (24) (1.0) (133) (13.2)
Tax credits . . . . . (174) (7.0) (185) (7.4) (127) (12.7)
Tax-rate changes . . . -- -- 53 2.1 39 3.9
Prior-year adjustments (68) (2.7) (125) (5.0) (119) (11.9)
All other (net) . . . . (39) (1.6) (2) -- 27 2.7
$ 702 28.2 $ 687 27.4 $ 153 15.2
55
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Taxes other than income taxes include:
1994 1993 1992
(millions of dollars)
Consumer excise taxes . . . . . . . . . . . . . $ 3,409 $ 2,824 $ 2,738
Production and severance taxes
United States . . . . . . . . . . . . . . . . 112 128 121
Foreign . . . . . . . . . . . . . . . . . . . 73 110 363
Property taxes . . . . . . . . . . . . . . . . 289 315 287
Social Security, corporation and other taxes . 270 271 235
$ 4,153 $ 3,648 $ 3,744
Undistributed earnings of certain foreign subsidiaries and
joint-venture companies aggregated $499 million on December 31, 1994,
which, under existing law, will not be subject to U.S. tax until
distributed as dividends. Since the earnings have been or are intended
to be indefinitely reinvested in foreign operations, no provision has
been made for any U.S. taxes that may be applicable thereto.
Furthermore, any taxes paid to foreign governments on those earnings may
be used in whole or in part, as credits against the U.S. tax on any
dividends distributed from such earnings. It is not practicable to
estimate the amount of unrecognized deferred U.S. taxes on these
undistributed earnings.
Note 16. Stock Option Plans
The Corporation's stock option plans approved by shareholders
provide for the granting of options with or without stock appreciation
rights ("SARs") to key, managerial and other eligible employees to buy
Corporation common stock at not less than 100 percent of the fair market
value at the date of grant. Such options may be incentive stock options
to the extent provided in the Internal Revenue Code. Options granted
under the plans prior to 1994 normally extend for 10 years and generally
become exercisable two years after the date of the grant. Options
granted in 1994 become exercisable 50 percent one year after the date of
grant and 100 percent two years after the date of grant. Options with
SARs permit holders to surrender exercisable options in exchange for
payment determined by the amount by which the market value of the shares
on the dates the rights are exercised exceeds the grant price. No
options were granted with SARs in 1994. Such payments can be made in
shares, cash or a combination at the discretion of the administering
committee.
56
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Option plan transactions in 1993 and 1994 are summarized in the
following table:
Thousands Price Range
of Shares Per Share
Options outstanding on Jan. 1, 1993 . . . . 9,259 $25.03 - 54.88
Granted . . . . . . . . . . . . . . 2,199 $53.69 - 57.44
Exercised . . . . . . . . . . . . . (615) $25.03 - 54.13
Surrendered or terminated . . . . . (172) $44.06 - 57.44
Canceled upon exercise of SARs . . (112) $25.03 - 52.44
Options outstanding on Dec. 31, 1993 . . . 10,559 $28.25 - 57.44
Granted . . . . . . . . . . . . . . 2,295 $55.06 - 57.88
Exercised . . . . . . . . . . . . . (684) $28.25 - 54.13
Surrendered or terminated . . . . . (454) $44.06 - 57.44
Canceled upon exercise of SARs . . (121) $28.25 - 42.50
Options outstanding on Dec. 31, 1994 . . . 11,595 $29.81 - 57.88
Of the total options outstanding on December 31, 1994, 499,140 were
with SARs. Stock options for 7,537,234 shares were exercisable at
year-end 1994. No options may be granted under the current plan after
December 31, 2001.
The Corporation's restricted stock grant plans provide for the
awarding of shares of Corporation common stock to selected employees of
Amoco and its participating subsidiaries, including officers and
directors. Shares issued under the plans may not be sold or otherwise
transferred for a minimum period as established at the time of the grant.
The shares generally are subject to forfeiture if the recipient's
employment terminates during the specified period unless such termination
is due to death, total disability or involuntary retirement. Shares
issued have dividend and voting rights identical to other outstanding
shares of the Corporation's common stock. During 1994, 57,735 shares
were issued under the current plans. No restricted shares may be issued
under the current plan after December 31, 2001.
Note 17. Employee Compensation Programs
Management incentive compensation plans approved by shareholders
provide for the granting of awards to key, managerial and other eligible
executives of the Corporation and certain subsidiaries. Amounts charged
against earnings in anticipation of awards to be made later were $15
million in 1994, $10 million in 1993 and $8 million in 1992. Awards made
in 1994, 1993 and 1992 amounted to $21 million, $13 million and $16
million, respectively.
57
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Amoco Performance Share Plan, which became effective in 1992,
allocates Amoco stock to eligible employees when the Corporation's total
return to shareholders meets or exceeds the average return achieved by a
select group of competitors. In 1994, the return on Amoco stock, based
on the average return for the past three years, was above the competitor
three-year average. As a result, employees earned stock equal to 3.5
percent of compensation. No contributions were made on behalf of
employees in 1993 as the return on Amoco common stock was below the
competitor average. In 1992 the return on Amoco stock was above the
competitor average, resulting in employees earning stock equal to 4.4
percent of compensation. The amounts charged to expense in 1994 and 1992
were $59 million and $77 million, respectively.
Note 18. Retirement Plans
The Corporation and its subsidiaries have a number of defined
benefit pension plans covering most employees. Plan benefits are
generally based on employees' years of service and average final
compensation. Essentially all of the cost of these plans is borne by the
Corporation. The Corporation makes contributions to the plans in amounts
that are intended to provide for the cost of pension benefits over the
service lives of employees.
58
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The funded status of the plans as of December 31 for 1994 and 1993
was as follows:
Plans for which
Assets Benefits
Exceed Exceeds
Benefits Assets
(millions of dollars)
1994
Fair value of plan assets, principally equity and
fixed-income securities . . . . . . . . . . . . . . . . . . $ 2,253 $ 73
Actuarial present value of benefit obligations:
Accumulated benefit obligation* . . . . . . . . . . . . . 2,191 186
Additional benefits based on estimated future salary
levels . . . . . . . . . . . . . . . . . . . . . . . . . 390 57
Projected benefit obligation ("PBO") . . . . . . . . . . 2,581 243
Plan assets under PBO . . . . . . . . . . . . . . . . . . . (328) (170)
Unrecognized net (gains) losses at transition . . . . . . . (58) 8
Other unrecognized net losses . . . . . . . . . . . . . . . 351 53
Unrecognized prior service cost . . . . . . . . . . . . . . 57 8
Net pension cost prepaid (accrued) . . . . . . . . . . . . $ 22 $ (101)
1993
Fair value of plan assets, principally equity and
fixed-income securities . . . . . . . . . . . . . . . . . . $ 2,432 $ 216
Actuarial present value of benefit obligations:
Accumulated benefit obligation* . . . . . . . . . . . . . 2,213 347
Additional benefits based on estimated future salary
levels . . . . . . . . . . . . . . . . . . . . . . . . . 479 111
Projected benefit obligation ("PBO") . . . . . . . . . .
2,692 458
Plan assets under PBO . . . . . . . . . . . . . . . . . . . (260) (242)
Unrecognized net gains at transition . . . . . . . . . . . (57) (1)
Other unrecognized net losses . . . . . . . . . . . . . . . 301 144
Unrecognized prior service cost . . . . . . . . . . . . . . 79 13
Net pension cost prepaid (accrued) . . . . . . . . . . . . $ 63 $ (86)
* Accumulated benefits totaling $266 million and $192 million were non-
vested at December 31, 1994 and 1993, respectively.
59
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The actuarial assumptions used for the Corporation's principal
pension plans for 1994 and 1993 were as follows:
1994 1993
Discount rate for service and interest cost . . . . . . 7.0% 7.5%
Discount rate for the projected benefit obligation . . 8.5% 7.0%
Rate of compensation increase for the projected benefit
obligation . . . . . . . . . . . . . . . . . . . . . . 5.0% 5.0%
Long-term rate of return on assets . . . . . . . . . . 10.0% 10.0%
The components of net pension cost for the past three years were as
follows:
1994 1993 1992
(millions of dollars)
Service cost--benefits earned during the
period . . . . . . . . . . . . . . . . . $ 113 $ 102 $ 114
Interest cost on projected benefit
obligation . . . . . . . . . . . . . . . 221 204 221
Actual loss (gain) on assets . . . . . . 53 (302) (141)
Less--unrecognized (loss) gain . . . . . (311) 50 (124)
Recognized gain on assets . . . . . . . . (258) (252) (265)
Curtailment loss (gain) . . . . . . . . . 21 -- (51)
Amortization of unrecognized amounts . . 22 1 11
Net pension cost . . . . . . . . . . . . $ 119 $ 55 $ 30
Most employees are also eligible to participate in defined
contribution plans by contributing a portion of their compensation. The
Corporation matches contributions up to specified percentages of each
employee's compensation. Matching contributions charged to income were
$99 million in 1994, $96 million in 1993 and $100 million in 1992.
Note 19. Other Postretirement Benefits
The Corporation and its subsidiaries provide certain health care and
life insurance benefits for retired employees. Substantially all of the
Corporation's domestic employees and employees in certain foreign
countries are provided these benefits through insurance companies whose
premiums are based on benefits paid during the year. Effective January
1, 1992, the Corporation adopted SFAS No. 106, which requires that the
cost of such benefits be recognized during employees' years of active
service. The cumulative effect of the accounting change relating to
benefits attributable to years of service prior to 1992 was to reduce
60
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1992 net income by $856 million ($1.72 per share). In addition, the
effect of adopting SFAS No. 106 in 1992 was to reduce net income by $64
million ($.13 per share). During 1992, the Corporation approved plan
amendments which reduced the accumulated obligation by $270 million,
which is being amortized prospectively.
The status of the Corporation's unfunded plans as of December 31 for
1994 and 1993 was as follows:
1994 1993
(millions of
dollars)
Accumulated benefit obligation
Retirees . . . . . . . . . . . . . . . . . . . . . $ 603 $ 668
Fully eligible active plan participants . . . . . 156 116
Other active plan participants . . . . . . . . . . 281 475
Total . . . . . . . . . . . . . . . . . . . . . . 1,040 1,259
Unrecognized net gains (losses) . . . . . . . . . . . 240 (56)
Unrecognized prior service gains . . . . . . . . . . 215 247
Accrued postretirement benefit cost . . . . . . . . . $ 1,495 $ 1,450
The actuarial assumptions used for the Corporation's principal
postretirement benefit plans for 1994 and 1993 were as follows:
1994 1993
Discount rate for service and interest cost . . . . . 7.0% 8.0%
Discount rate for the accumulated benefit obligation 8.5% 7.0%
Rate of compensation increase for the accumulated
benefit obligation . . . . . . . . . . . . . . . . . 5.0% 5.0%
Assumed current year health care cost trend rate
--retirees under 65 . . . . . . . . . . . . . . . 11.1% 12.0%
--Medicare eligible retirees . . . . . . . . . . . 8.5% 9.0%
Assumed ultimate trend rate . . . . . . . . . . . . . 5.0% 5.0%
Year ultimate health care cost rate will be achieved 2002 2002
Effect of 1% increase in health care cost trend rates
(millions)
--annual aggregate service and interest costs . . $ 18 $ 17
--accumulated postretirement benefit obligation . $ 93 $144
61
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The components of net postretirement benefit costs for the past
three years were as follows:
1994 1993 1992
(millions of dollars)
Service cost--benefits earned during the
period . . . . . . . . . . . . . . . . . $ 34 $ 32 $ 44
Interest cost on accumulated benefit
obligation . . . . . . . . . . . . . . . 89 97 105
Amortization and other . . . . . . . . . (33) (22) (10)
Net postretirement benefit cost . . . . . $ 90 $ 107 $ 139
Note 20. Litigation
The Internal Revenue Service ("IRS") has challenged the application
of certain foreign income taxes as credits against the Corporation's U.S.
taxes that otherwise would have been payable for the years 1980 through
1989. On June 18, 1992, the IRS issued a statutory Notice of Deficiency
for additional taxes in the amount of $466 million, plus interest,
relating to 1980 through 1982. The Corporation has filed a petition in
the U.S. Tax Court contesting the IRS statutory Notice of Deficiency.
Trial on the matter is scheduled to commence in April 1995. A comparable
adjustment of foreign tax credits for each year has been proposed for the
years 1983 through 1989 based upon subsequent IRS audits. Similar
challenges could arise relating to years subsequent to 1989. The
Corporation believes that the foreign income taxes have been reflected
properly in its U.S. federal tax returns. The Corporation is confident
that it will prevail in the litigation. Consequently, this dispute is
not expected to have a material adverse effect on liquidity, results of
operations, or the consolidated financial position of the Corporation.
Note 21. Other Contingencies
Amoco is subject to federal, state and local environmental laws and
regulations. Amoco is currently participating in the cleanup of numerous
sites pursuant to such laws and regulations. The reasonably estimable
future costs of probable environmental obligations, including Amoco's
probable costs for obligations for which Amoco is jointly and severally
liable, and for assets or businesses that were previously disposed, have
been provided for in the Corporation's results of operations. These
estimated costs represent the amount of expenditures expected to be
incurred in the future to remediate sites with known environmental
obligations. The accrued liability represents a reasonable best estimate
of Amoco's remediation liability. As the scope of the obligations
62
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
becomes better defined, there may be changes in the estimated future
costs, which could result in charges against the company's future results
of operations. The ultimate amount of any such future costs, and the
range within which such costs can be expected to fall, cannot be
determined. Although the costs could be significant, they are not
expected to have a material effect on Amoco's liquidity or consolidated
financial position.
Note 22. Summarized Financial Data--Amoco Company
The Corporation's principal subsidiary, Amoco Company, is the
holding company for substantially all petroleum and chemical operating
subsidiaries except Amoco Canada. Amoco guarantees the outstanding
public debt obligations of Amoco Company.
Summarized financial data for Amoco Company are presented as follows:
1994 1993 1992
(millions of dollars)
For the years ended December 31:
Revenues (including excise taxes) . . . . $ 27,841 $ 25,930 $ 25,698
Operating profit . . . . . . . . . . . . $ 2,470 $ 2,595 $ 1,760
Net income(1) . . . . . . . . . . . . . . $ 1,878 $ 1,803 $ 1,226
At December 31:
Current assets . . . . . . . . . . . . . $ 5,399 $ 4,383 $ 4,644
Total assets . . . . . . . . . . . . . . $ 24,549 $ 23,513 $ 23,645
Current liabilities . . . . . . . . . . . $ 4,142 $ 3,976 $ 3,949
Long-term obligations(2) . . . . . . . . $ 6,190 $ 1,967 $ 2,811
Deferred credits . . . . . . . . . . . . $ 4,584 $ 4,441 $ 4,257
Minority interest . . . . . . . . . . . . $ 5 $ -- $ --
Shareholder's equity(2) . . . . . . . . . $ 9,628 $ 13,129 $ 12,628
(1) Excludes cumulative effects of accounting changes of $(702) million
in 1992.
(2) Change reflects dividends in 1994 to Amoco Corporation of
intercompany notes receivable from subsidiaries.
Annual maturities of long-term debt during the next five years,
including the portion classified as current, are $24 million in 1995,
$658 million in 1996, $187 million in 1997, $247 million in 1998 and $134
million in 1999.
Note 23. Segment and Geographic Data
The Corporation operates in several industry segments. Petroleum
operations include exploration and production ("E&P") and refining,
63
AMOCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
marketing and transportation ("RM&T") segments. The E&P segment is
engaged in exploring for, developing and producing crude oil and natural
gas and extraction of natural gas liquids ("NGL"). The RM&T segment is
responsible for petroleum refining operations, the marketing of all
refined petroleum products and the transportation and wholesale marketing
of NGL and domestic natural gas. This segment also encompasses
transportation of crude oil to refineries via marine vessels and
pipelines and associated supply and trading activities. The chemical
segment manufactures and sells various petroleum-based chemical products.
Other operations include investments in technology companies, offshore
contract drilling, real estate interests, and other activities.
Intersegment and intergeographic sales are accounted for at prices
that approximate arm's-length market prices. Operating profits include
all revenues and expenses of the reportable segment, except for income
taxes and equity in earnings of unconsolidated companies. Income taxes
are generally assigned to the operations that give rise to the tax
effects.
Identifiable assets are those used in the operations of each segment
or area, including intersegment or intergeographic receivables.
Corporate assets consist primarily of cash, marketable securities and the
unamortized cost of purchased tax benefits. Intersegment and
intergeographic sales and receivables are eliminated in determining
consolidated revenue and identifiable asset totals. Information by
Industry Segment and Geographic Area is summarized in the tables on pages
65 to 68.
64
Statement of Information by Industry Segment
(millions of dollars) Petroleum Operations
Exploration Refining,
and Marketing and Chemical
Production Transportation Operations
Year 1994
Revenues other than intersegment
sales . . . . . . . . . . . . . $ 2,568 $ 22,555 $ 4,593
Intersegment sales . . . . . . 3,892 976 69
Total revenues . . . . . . . $ 6,460 $ 23,531 $ 4,662
Operating profit . . . . . . . $ 1,585 $ 591 $ 684
Equity in earnings of others . 4 31 98
General corporate amounts . . .
Interest expense . . . . . . .
Income taxes . . . . . . . . . (602) (204) (244)
Net income . . . . . . . . . $ 987 $ 418 $ 538
Depreciation and related charges $ 1,531 $ 444 $ 195
Capital expenditures . . . . . $ 1,561 $ 451 $ 467
Identifiable assets . . . . . . $ 13,390 $ 7,881 $ 4,375
Equity investments and related
advances . . . . . . . . . . . $ 34 $ 32 $ 351
Other Consol-
Operations Corporate idated*
Year 1994
Revenues other than intersegment
sales . . . . . . . . . . . . . $ 144 $ 30,362
Intersegment sales . . . . . . -- --
Total revenues . . . . . . . $ 144 $ 30,362
Operating profit . . . . . . . $ (248) $ 2,612
Equity in earnings of others . -- 133
General corporate amounts . . . $ 64 64
Interest expense . . . . . . . (318) (318)
Income taxes . . . . . . . . . 93 255 (702)
Net income . . . . . . . . . $ (155) $ 1 $ 1,789
Depreciation and related charges $ 32 $ 37 $ 2,239
Capital expenditures . . . . . $ 48 $ 45 $ 2,572
Identifiable assets . . . . . . $ 586 $ 2,678 $ 28,896
Equity investments and related
advances . . . . . . . . . . . $ 3 420
Total assets . . . . . . . . $ 29,316
* After elimination of intersegment transactions.
65
Statement of Information by Industry Segment
(millions of dollars) Petroleum Operations
Exploration Refining,
and Marketing and Chemical
Production Transportation Operations
Year 1993
Revenues other than intersegment
sales . . . . . . . . . . . . . $ 2,631 $ 22,021 $ 3,699
Intersegment sales . . . . . . 4,057 893 74
Total revenues . . . . . . . $ 6,688 $ 22,914 $ 3,773
Operating profit . . . . . . . $ 1,563 $ 1,237 $ 321
Equity in earnings of others . -- 30 60
General corporate amounts . . .
Interest expense . . . . . . .
Income taxes . . . . . . . . . (568) (441) (141)
Net income . . . . . . . . . $ 995 $ 826 $ 240
Depreciation and related charges $ 1,518 $ 419 $ 182
Capital expenditures . . . . . $ 1,590 $ 685 $ 370
Identifiable assets . . . . . . $ 13,822 $ 8,108 $ 3,938
Equity investments and related
advances . . . . . . . . . . . $ 31 $ 32 $ 234
Other Consol-
Operations Corporate idated*
Year 1993
Revenues other than intersegment
sales . . . . . . . . . . . . . $ 166 $ 28,617
Intersegment sales . . . . . . 24 --
Total revenues . . . . . . . $ 190 $ 28,617
Operating profit . . . . . . . $ (75) $ 3,046
Equity in earnings of others . (1) 89
General corporate amounts . . . $ (303) (303)
Interest expense . . . . . . . (325) (325)
Income taxes . . . . . . . . . 31 432 (687)
Net income . . . . . . . . . $ (45) $ (196) $ 1,820
Depreciation and related charges $ 30 $ 44 $ 2,193
Capital expenditures . . . . . $ 126 $ 46 $ 2,817
Identifiable assets . . . . . . $ 633 $ 2,051 $ 28,185
Equity investments and related
advances . . . . . . . . . . . $ 4 301
Total assets . . . . . . . . $ 28,486
* After elimination of intersegment transactions.
66
Statement of Information by Industry Segment
(millions of dollars) Petroleum Operations
Exploration Refining,
and Marketing and Chemical
Production Transportation Operations
Year 1992
Revenues other than intersegment
sales . . . . . . . . . . . . . $ 2,812 $ 21,282 $ 3,807
Intersegment sales . . . . . . 4,165 981 113
Total revenues . . . . . . . $ 6,977 $ 22,263 $ 3,920
Operating profit . . . . . . . $ 1,149 $ 664 $ (174)
Equity in earnings of others . (2) 25 31
General corporate amounts . . .
Interest expense . . . . . . .
Income taxes . . . . . . . . . (276) (227) 49
Net income (loss) . . . . . . $ 871 $ 462 $ (94)
Depreciation and related charges $ 1,751 $ 390 $ 189
Capital expenditures . . . . . $ 1,092 $ 806 $ 320
Identifiable assets . . . . . . $ 13,909 $ 8,135 $ 3,592
Equity investments and related
advances . . . . . . . . . . . $ 85 $ 26 $ 188
Other Consol-
Operations Corporate idated*
Year 1992
Revenues other than intersegment
sales . . . . . . . . . . . . . $ 155 $ 28,219
Intersegment sales . . . . . . 48 --
Total revenues . . . . . . . $ 203 $ 28,219
Operating profit . . . . . . . $ (225) $ 1,414
Equity in earnings of others . (9) 45
General corporate amounts . . . $ (209) (209)
Interest expense . . . . . . . (247) (247)
Income taxes . . . . . . . . . 55 246 (153)
Cumulative effects of accounting
changes . . . . . . . . . (924)
Net income (loss) . . . . . . $ (179) $ (210) $ (74)
Depreciation and related charges $ 61 $ 49 $ 2,440
Capital expenditures . . . . . $ 60 $ 56 $ 2,334
Identifiable assets . . . . . . $ 633 $ 2,199 $ 27,951
Equity investments and related
advances . . . . . . . . . . . $ 203 502
Total assets . . . . . . . . $ 28,453
*After elimination of intersegment transactions.
67
Statement of Information by Geographic Area
Consol-
United idated
(millions of dollars) States Canada Europe Other Corporate (1)
Year 1994
Revenues other than
intergeographic sales . $24,003 $ 2,555 $ 1,403 $ 1,899 $ 30,362
Intergeographic sales . 711 706 24 473 --
Total revenues . . . $24,714 $ 3,261 $ 1,427 $ 2,372 30,362
Operating profit . . . $ 1,836 $ 349 $ 47 $ 380 $ 2,612
Net income . . . . . . $ 1,393 $ 203 $ 4 $ 188 $ 1 $ 1,789
Capital expenditures . $ 1,537 $ 340 $ 126 $ 524 $ 45 $ 2,572
Identifiable assets . . $18,074 $ 3,566 $ 2,469 $ 2,123 $ 2,678 $ 28,896
Equity investments
and related advances . $ 36 $ 33 $ 4 $ 347 420
Total assets . . . . $ 29,316
Equity in earnings
of others . . . . . . . $ 30 $ 4 $ -- $ 99 $ 133
Year 1993
Revenues other than
intergeographic sales . $22,777 $ 2,664 $ 1,051 $ 2,025 $ 28,617
Intergeographic sales . 562 749 38 462 --
Total revenues . . . $23,339 $ 3,413 $ 1,089 $ 2,487 $ 28,617
Operating profit . . . $ 2,200 $ 607 $ (80) $ 319 $ 3,046
Net income . . . . . . $ 1,589 $ 451 $ (104) $ 80 $ (196) $ 1,820
Capital expenditures . $ 1,624 $ 294 $ 362 $ 491 $ 46 $ 2,817
Identifiable assets . . $18,226 $ 3,703 $ 2,371 $ 2,118 $ 2,051 $ 28,185
Equity investments
and related advances . $ 39 $ 28 $ 3 $ 231 301
Total assets . . . . $ 28,486
Equity in earnings
of others . . . . . . . $ 26 $ 1 $ (2) $ 64 $ 89
Year 1992
Revenues other than
intergeographic sales . $22,051 $ 2,442 $ 1,180 $ 2,383 $ 28,219
Intergeographic sales . 586 $ 780 $ 15 $ 698 $ --
Total revenues . . . $22,637 $ 3,222 $ 1,195 $ 3,081 $ 28,219
Operating profit . . . $ 1,144 $ (225)$ 12 $ 483 $ 1,414
Net income (loss) . . . $ 909 $ 33 $ (107) $ 225 $ (210) $ (74)(2)
Capital expenditures . $ 1,399 $ 128 $ 469 $ 282 $ 56 $ 2,334
Identifiable assets . . $17,768 $ 3,811 $ 2,340 $ 2,252 $ 2,199 $ 27,951
Equity investments and
related advances . . . $ 36 $ 82 $ 3 $ 381 502
Total assets . . . . $ 28,453
Equity in earnings of
others . . . . . . . . $ 23 $ (2)$ (10) $ 34 $ 45
(1) After elimination of intergeographic transactions.
(2) Includes cumulative effects of accounting changes of $(924) million
in 1992.
68
AMOCO CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
1. Quarterly Results and Stock Market Data
Net Common Stock
Income Cash Price Ranges(2)
Operating Net (Loss) Dividends
Profit Income Per Per High Low
Revenues (Loss) (Loss)(1) Share Share
(millions of dollars, except per-share amounts)
1994
First quarter . $ 6,765 $ 634 $ 398 $ .80 $ .55 $ 56 1/8 $ 50 7/8
Second quarter 8,035 558 410 .83 .55 60 51 1/8
Third quarter . 7,780 751 445 .89 .55 61 1/4 56 3/4
Fourth quarter 7,782 669 536 1.08 .55 64 1/8 57 1/2
1993
First quarter . 6,943 509 229 .46 .55 58 1/2 48 1/8
Second quarter 7,225 811 487 .98 .55 59 1/4 53 5/8
Third quarter . 7,072 817 520 1.05 .55 58 3/8 52 3/8
Fourth quarter 7,377 909 584 1.17 .55 59 51 1/2
(1) Fourth-quarter 1994 earnings included a $45 million gain associated with the
disposition of certain European oil and gas properties, and tax adjustments
benefiting corporate operations of $33 million. Results for the third quarter of
1994 included environmental charges of $32 million. Net income for the second
quarter of 1994 included restructuring charges of $256 million. Second-quarter 1994
results also included benefits of $270 million relating to final settlements with the
IRS involving crude oil excise taxes in the 1980s. Results for the fourth quarter of
1993 included a gain of $120 million associated with the disposition of a portion of
an equity investment in a Canadian company. Net income in the third quarter of 1993
included a gain of $70 million associated with the disposition of certain non-
strategic Canadian properties. First-quarter results included charges of $170
million related to the writedown of Congo exploration and production operations to
current recoverable value and tax benefits of $56 million resulting from disposition
of certain operations.
(2) The common stock price range is that on the New York Stock Exchange. Amoco's common
stock is also traded on the Chicago, Pacific, Toronto and four Swiss stock exchanges.
69
2. Oil and Gas Exploration and Production Activities
Supplemental information about oil and gas exploration and
production activities is reported in compliance with SFAS No. 69,
"Disclosures about Oil and Gas Producing Activities."
Results of Operations for Oil and Gas Producing Activities
United
(millions of dollars) States Canada Europe Other Worldwide
1994
Oil and gas production
revenues:
From consolidated
subsidiaries . . . . . . . $ 2,497 $ 323 $ 2 $ 877 $ 3,699
From unaffiliated entities 460 412 668 603 2,143
Other revenues . . . . . . . 263 186 100 69 618
Total revenues . . . . . . 3,220 921 770 1,549 6,460
Production costs:
Taxes other than income . 242 17 21 65 345
Other production costs . . 788 265 278 401 1,732
Exploration expenses . . . . 113 117 178 225 633
Depreciation, depletion and
amortization expense . . . 629 261 215 340 1,445
Other related costs . . . . . 412 27 130 151 720
Total costs . . . . . . . . 2,184 687 822 1,182 4,875
Operating profit . . . . . . 1,036 234 (52) 367 1,585
Income tax expense . . . . . 188 113 11 290 602
Results of operations . . . $ 848 $ 121 $ (63) $ 77 $ 983
1993
Oil and gas production
revenues:
From consolidated
subsidiaries . . . . . . . $ 2,572 $ 385 $ 12 $ 1,078 $ 4,047
From unaffiliated entities 742 411 492 442 2,087
Other revenues . . . . . . . 137 322 42 53 554
Total revenues . . . . . . 3,451 1,118 546 1,573 6,688
Production costs:
Taxes other than income . . 297 13 17 102 429
Other production costs . . 875 276 209 380 1,740
Exploration expenses . . . . 90 47 151 241 529
Depreciation, depletion and
amortization expense . . . . 693 293 165 327 1,478
Other related costs . . . . . 495 61 95 298 949
Total costs . . . . . . . . 2,450 690 637 1,348 5,125
Operating profit . . . . . . 1,001 428 (91) 225 1,563
Income tax expense . . . . . 189 91 9 279 568
Results of operations . . . $ 812 $ 337 $ (100) $ (54) $ 995
Certain data for 1993 have been
reclassified.
70
United
(millions of dollars) States Canada Europe Other Worldwide
Year 1992
Oil and gas production
revenues:
From consolidated
subsidiaries . . . . . . . $ 2,366 $ 476 $ -- $ 1,259 $ 4,101
From unaffiliated entities 904 348 586 822 2,660
Other revenues . . . . . . . 65 71 26 54 216
Total revenues . . . . . . 3,335 895 612 2,135 6,977
Production costs:
Taxes other than income . . 271 15 21 351 658
Other production costs . . 934 358 225 382 1,899
Exploration expenses . . . . 140 72 150 300 662
Depreciation, depletion and
amortization expense . . . . 703 347 206 401 1,657
Other related costs . . . . . 286 506 18 142 952
Total costs . . . . . . . . 2,334 1,298 620 1,576 5,828
Operating profit . . . . . . 1,001 (403) (8) 559 1,149
Income tax expense . . . . . 223 (324) 95 282 276
Results of operations . . . $ 778 $ (79) $ (103) $ 277 $ 873
Oil and gas production revenues reflect the market prices of net
production sold or transferred, with appropriate adjustments for
royalties, net profits interest and other contractual provisions. Other
revenues in 1994 include the U.S. COET settlement; other revenues in 1993
include Canadian gains on dispositions of properties and investments.
Taxes other than income include production and severance taxes and
property taxes. Other production costs are lifting costs incurred to
operate and maintain productive wells and related equipment, including
such costs as operating labor, repairs and maintenance, materials,
supplies and fuel consumed. Also included are operating costs of field
natural gas liquids plants, because the Corporation includes the
operations of these plants in the exploration and production segment.
Production costs include related administrative expenses and depreciation
applicable to support equipment associated with production activities.
Exploration expenses include the costs of geological and geophysical
activity, carrying and retaining undeveloped properties and drilling
exploratory wells determined to be non-productive. Depreciation,
depletion and amortization expense relates to capitalized costs incurred
in acquisition, exploration and development activities and does not
include depreciation applicable to support equipment. Included in other
related costs are significant, non-recurring items and purchases of
natural gas for field natural gas liquids plants. Significant, non-
recurring items include $102 million for restructuring in 1994; $210
million for the writedown of Congo operations to current recoverable
value and U.S. environmental charges of $96 million in 1993; and
restructuring charges of $566 million in 1992.
Income taxes are generally assigned to the operations that give rise
to the tax effects. Results of operations do not include interest
expense and general corporate amounts nor their associated tax effects.
71
Standardized Measure of Discounted Future Net Cash Flows
Relating to Proved Oil and Gas Reserves
The standardized measure of discounted future net cash flows
relating to proved oil and gas reserves is prescribed by SFAS No. 69.
The statement requires measurement of future net cash flows through
assignment of a monetary value to proved reserve quantities and changes
therein using a standardized formula. The amounts shown are based on
prices and costs at the end of each period, legislated tax rates and a 10
percent annual discount factor. Because the calculation assumes static
economic and political conditions and requires extensive judgment in
estimating the timing of production, the resultant future net cash flows
are not necessarily indicative of the fair market value of estimated
proved reserves, but provide a reference point that may assist the user
in projecting future cash flows.
Summarized below is the standardized measure of discounted future
net cash flows relating to proved oil and gas reserves at December 31,
1994, 1993 and 1992.
United
(millions of dollars) States Canada Europe Other Worldwide
December 31, 1994
Future cash inflows . . . . . $ 33,605 $ 8,135 $ 6,736 $ 10,951 $ 59,427
Future development and
production costs . . . . . . 16,922 3,686 3,939 4,207 28,754
Future income taxes . . . . . 3,999 1,471 950 2,776 9,196
Future net cash flows . . . . 12,684 2,978 1,847 3,968 21,477
Ten percent annual discount . 7,189 1,324 538 1,435 10,486
Discounted net cash flows . . $ 5,495 $ 1,654 $ 1,309 $ 2,533 $ 10,991
December 31, 1993
Future cash inflows . . . . . $ 35,403 $ 7,948 $ 5,826 $ 8,242 $ 57,419
Future development and
production costs . . . . . . 17,639 3,605 3,091 4,084 28,419
Future income taxes . . . . . 4,235 1,566 1,012 1,620 8,433
Future net cash flows . . . . 13,529 2,777 1,723 2,538 20,567
Ten percent annual discount . 7,714 1,259 589 961 10,523
Discounted net cash flows . . $ 5,815 $ 1,518 $ 1,134 $ 1,577 $ 10,044
December 31, 1992
Future cash inflows . . . . . $ 43,134 $ 9,786 $ 6,574 $ 9,109 $ 68,603
Future development and
production costs . . . . . . 17,541 4,872 3,442 3,751 29,606
Future income taxes . . . . . 6,837 1,828 1,371 2,217 12,253
Future net cash flows . . . . 18,756 3,086 1,761 3,141 26,744
Ten percent annual discount . 10,829 1,459 695 1,091 14,074
Discounted net cash flows . . $ 7,927 $ 1,627 $ 1,066 $ 2,050 $ 12,670
Future cash inflows are computed by applying the year-end prices of
oil and gas to proved reserve quantities as reported in the tables under
72
the heading "Estimated Proved Reserves." Future price changes are
considered only to the extent provided by contractual arrangements.
Future development and production costs are estimated expenditures to
develop and produce the proved reserves based on year-end costs and
assuming continuation of existing economic conditions. Future income
taxes are calculated by applying appropriate statutory tax rates to
future pre-tax net cash flows from proved oil and gas reserves less
recovery of the tax basis of proved properties, and adjustments for
permanent differences.
Statement of Changes in Standardized Measure
of Discounted Future Net Cash Flows
The following table details the changes in the standardized measure
of discounted future net cash flows for the three years ended December
31, 1994:
1994 1993 1992
(millions of dollars)
Balance at January 1 . . . . . . . . . . . . . . . $10,044 $12,670 $ 11,830
Changes resulting from:
Sales and transfers of oil and gas produced, net
of production costs . . . . . . . . . . . . . . . (3,765) (3,965) (4,204)
Net changes in prices, and development and
production costs . . . . . . . . . . . . . . . . 1,059 (3,966) 1,872
Current-year expenditures for development . . . . 1,499 1,594 1,318
Extensions, discoveries, and improved recovery,
less related costs . . . . . . . . . . . . . . . 1,128 758 593
Sales of reserves in place . . . . . . . . . . . (45) (235) (332)
Revisions of previous quantity estimates . . . . 303 488 (182)
Accretion of discount . . . . . . . . . . . . . . 1,331 1,798 1,702
Net change in income taxes . . . . . . . . . . . (253) 1,861 (178)
Other . . . . . . . . . . . . . . . . . . . . . . (310) (959) 251
Balance at December 31 . . . . . . . . . . . . . . $10,991 $10,044 $ 12,670
Certain data for 1993 have been reclassified.
The price of crude oil has fluctuated over the past several years,
and price changes have had significant effects on the computed future
cash flows over the period shown. Because the price of crude oil is
likely to remain volatile in the future, price changes can be expected to
continue to significantly affect the standardized measure of future net
cash flows.
73
Estimated Proved Reserves
Net proved reserves of crude oil (including condensate), natural gas
liquids ("NGL") and natural gas at the beginning and end of 1994, 1993
and 1992, with the detail of changes during those years, are presented
below. Reported quantities include reserves in which the Corporation
holds an economic interest under production-sharing and other types of
operating agreements with foreign governments. The estimates were
prepared by Corporation engineers and are based on current technology and
economic conditions. The Corporation considers such estimates to be
reasonable and consistent with current knowledge of the characteristics
and extent of proved production. These estimates include only those
amounts considered to be proved reserves and do not include additional
amounts that may result from extensions of currently proved areas, or
amounts that may result from new discoveries in the future, or from
application of secondary or tertiary recovery processes not yet
determined to be commercial. Proved developed reserves are those
reserves that are expected to be recovered through existing wells with
existing equipment and operating methods.
74
Crude Oil and NGL Reserves
United
States Canada Europe Other Worldwide
Crude
Crude Crude Crude Oil, Crude
(millions of barrels) Oil NGL Oil NGL Oil NGL NGL Oil NGL
Proved reserves:
December 31, 1991 . . 960 471 267 55 171 14 508 1,898 548
Revisions of
previous estimates (15) 11 14 (1) 23 (1) (6) 16 9
Improved recovery
applications . . . 2 -- 3 -- 8 1 2 15 1
Extensions,
discoveries and
other additions . . 2 2 1 -- 3 -- 22 26 4
Purchases of
reserves in place . 3 -- 43 6 -- -- -- 46 6
Sales of reserves in
place . . . . . . . (3) -- (53) (9) (1) -- (2) (59) (9)
Production . . . . (84) (23)(*) (29) (4) (19) (1) (91) (221) (30)
December 31, 1992 . . 865 461 246 47 185 13 433 1,721 529
Revisions of
previous estimates 14 3 8 1 6 1 35 63 5
Improved recovery
applications . . . 6 2 1 -- 14 1 34 55 3
Extensions,
discoveries and
other additions . . 5 2 19 1 4 -- 77 103 5
Purchases of
reserves in place . 1 1 12 2 -- -- 2 14 4
Sales of reserves in
place . . . . . . . (3) (1) (35) (4) -- -- -- (38) (5)
Production . . . . (75) (25)(*) (26) (5) (18) -- (87) (204) (32)
December 31, 1993 . . 813 443 225 42 191 15 494 1,714 509
Revisions of
previous estimates (20) 18 (2) 2 7 (1) 27 13 18
Improved recovery
applications . . . 16 3 6 -- 4 -- 30 56 3
Extensions,
discoveries and
other additions . . 48 6 36 2 6 2 49 139 10
Purchases of
reserves in place . 5 -- 4 -- -- -- -- 9 --
Sales of reserves in
place . . . . . . . (5) (1) (3) -- (7) (1) (22) (37) (2)
Production . . . . (71) (22)(*) (21) (5) (24) (1) (83) (198) (29)
December 31, 1994 . . 786 447 245 41 177 14 495 1,696 509
Proved developed
reserves:
December 31, 1991 . . 930 423 252 50 114 11 434 1,723 491
December 31, 1992 . . 839 413 236 43 123 9 384 1,574 473
December 31, 1993 . . 789 396 205 39 154 12 381 1,521 455
December 31, 1994 . . 727 404 198 38 150 10 387 1,455 459
75
Natural Gas Reserves
United
(billions of cubic feet) States Canada Europe Other Worldwide
Proved reserves:
December 31, 1991 . . . . . . . . . . 11,649 4,269 1,156 1,626 18,700
Revisions of previous estimates . . 506 (8) 77 (15) 560
Improved recovery applications . . -- -- 6 -- 6
Extensions, discoveries and other
additions . . . . . . . . . . . . . 354 134 7 46 541
Purchases of reserves in place . . 2 377 131 -- 510
Sales of reserves in place . . . . (50) (965) (36) -- (1,051)
Production . . . . . . . . . . . . (845) (288) (98) (183) (1,414)
December 31, 1992 . . . . . . . . . . 11,616 3,519 1,243 1,474 17,852
Revisions of previous estimates . . 812 (25) 81 68 936
Improved recovery applications . . 1 -- 6 -- 7
Extensions, discoveries and other
additions . . . . . . . . . . . . . 160 112 22 247 541
Purchases of reserves in place . . 76 86 9 52 223
Sales of reserves in place . . . . (31) (391) -- -- (422)
Production . . . . . . . . . . . . (867) (332) (95) (193) (1,487)
December 31, 1993 . . . . . . . . . . 11,767 2,969 1,266 1,648 17,650
Revisions of previous estimates . . 220 91 14 159 484
Improved recovery applications . . 1 1 2 -- 4
Extensions, discoveries and other
additions . . . . . . . . . . . . . 555 288 236 778 1,857
Purchases of reserves in place . . 117 7 -- -- 124
Sales of reserves in place . . . . (39) (45) (9) -- (93)
Production . . . . . . . . . . . . (893) (289) (121) (202) (1,505)
December 31, 1994 . . . . . . . . . . 11,728 3,022 1,388 2,383 18,521
Proved developed reserves:
December 31, 1991 . . . . . . . . . . 10,892 3,507 621 606 15,626
December 31, 1992 . . . . . . . . . . 10,876 2,916 645 454 14,891
December 31, 1993 . . . . . . . . . . 11,019 2,556 1,062 618 15,255
December 31, 1994 . . . . . . . . . . 10,829 2,643 1,028 1,038 15,538
*Excludes non-leasehold NGL production attributable to processing plant
ownership of approximately 10 million barrels for each of 1992, 1993 and
1994.
76
Capitalized Costs
The following table summarizes capitalized costs for oil and gas
exploration and production activities, and the related accumulated
depreciation, depletion and amortization.
United
(millions of dollars) States Canada Europe Other Worldwide
December 31, 1994
Unproved properties:
Gross assets . . . . . . . . . $ 365 $ 224 $ 114 $ 170 $ 873
Accumulated amortization . . . 113 91 12 -- 216
Net assets . . . . . . . . . 252 133 102 170 657
Proved properties:
Gross assets . . . . . . . . . 14,574 3,906 2,804 6,029 27,313
Accumulated depreciation,
depletion, etc. . . . . . . . . 8,168 2,076 1,443 4,781 16,468
Net assets . . . . . . . . . 6,406 1,830 1,361 1,248 10,845
Support equipment and facilities:
Gross assets . . . . . . . . . 620 75 106 343 1,144
Accumulated depreciation . . . 321 32 64 235 652
Net assets . . . . . . . . . 299 43 42 108 492
Net capitalized costs . . . . . . $ 6,957 $ 2,006 $ 1,505 $ 1,526 $11,994
December 31, 1993
Unproved properties:
Gross assets . . . . . . . . . $ 320 $ 120 $ 163 $ 96 $ 699
Accumulated amortization . . . 133 61 -- -- 194
Net assets . . . . . . . . . 187 59 163 96 505
Proved properties:
Gross assets . . . . . . . . . 14,099 3,736 2,515 5,796 26,146
Accumulated depreciation,
depletion, etc. . . . . . . . . 7,699 1,896 1,230 4,463 15,288
Net assets . . . . . . . . . 6,400 1,840 1,285 1,333 10,858
Support equipment and facilities:
Gross assets . . . . . . . . . 638 74 118 364 1,194
Accumulated depreciation . . . 290 28 63 233 614
Net assets . . . . . . . . . 348 46 55 131 580
Net capitalized costs . . . . . . $ 6,935 $ 1,945 $ 1,503 $ 1,560 $11,943
77
Costs Incurred
Property acquisition costs include costs incurred to purchase, lease
or otherwise acquire oil and gas properties. Exploration costs include
the costs of geological and geophysical activity, carrying and retaining
undeveloped properties and drilling and equipping exploratory wells.
Development costs include the costs of drilling and equipping development
wells, CO2 and certain other injected materials for enhanced recovery
projects and facilities to extract, treat and gather and store oil and
gas. Exploration and development costs include administrative expenses
and depreciation applicable to support equipment associated with these
activities. Costs incurred summarized below include both amounts
expensed and capitalized.
United
(millions of dollars) States Canada Europe Other Worldwide
1994
Property acquisition:
Proved . . . . . . . . $ 52 $ 11 $ 9 $ 1 $ 73
Unproved . . . . . . . 50 51 3 2 106
Exploration . . . . . . . 245 116 185 291 837
Development . . . . . . . 614 246 193 446 1,499
Total . . . . . . . $ 961 $ 424 $ 390 $ 740 $ 2,515
1993
Property acquisition:
Proved . . . . . . . . $ 11 $ 11 $ 36 $ 23 $ 81
Unproved . . . . . . . 4 23 54 20 101
Exploration . . . . . . . 133 64 149 229 575
Development . . . . . . . 657 234 276 427 1,594
Total . . . . . . . $ 805 $ 332 $ 515 $ 699 $ 2,351
1992
Property acquisition:
Proved . . . . . . . . $ 2 $ 2 $ -- $ -- $ 4
Unproved . . . . . . . 14 8 3 5 30
Exploration . . . . . . . 151 35 139 311 636
Development . . . . . . . 479 116 381 342 1,318
Total . . . . . . . $ 646 $ 161 $ 523 $ 658 $ 1,988
78
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Part III
Item 10. Directors and Executive Officers of the Registrant
The information required by this item with respect to directors is
incorporated by reference to pages 3-10 of Amoco's Proxy Statement dated
March 13, 1995. Also, see heading "Executive Officers of the Registrant"
on page 19 of this Form 10-K.
Item 11. Executive Compensation
The information required by this item is incorporated by reference
to pages 11-19 of Amoco's Proxy Statement dated March 13, 1995.
Information related to the Board Compensation and Organization Committee
Report on Executive Compensation and the Cumulative Total Shareholder
Return Five-Year Comparison graph are identified separately therein and
are not incorporated herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated by reference
to pages 3, 10, 13 and 14 of Amoco's Proxy Statement dated March 13,
1995.
Item 13. Certain Relationships and Related Transactions
The information required by this item is incorporated by reference
to page 10 of Amoco's Proxy Statement dated March 13, 1995.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. and 2. Financial Statements and Schedules
See Index to Financial Statements and Supplemental Information
on page 36.
Schedules not included in this Form 10-K have been omitted because
they are either not applicable or the required information is shown in
the financial statements or notes thereto.
79
3. Exhibits
See Index to Exhibits on page 84.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
December 31, 1994.
80
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Chicago, and State of Illinois, on the 21st
day of March, 1995.
AMOCO CORPORATION
(Registrant)
JOHN L. CARL
John L. Carl
Executive Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on March 21, 1995.
Signatures Titles
Chairman of the Board, President,
H. LAURANCE FULLER * and Director
H. Laurance Fuller (Principal Executive Officer)
Executive Vice President and Chief
JOHN L. CARL* Financial Officer
John L. Carl (Principal Financial Officer)
J. R. REID Vice President and Controller
J. R. Reid (Principal Accounting Officer)
L. D. THOMAS* Vice Chairman and Director
L. D. Thomas
PATRICK J. EARLY* Vice Chairman and Director
Patrick J. Early
DONALD R. BEALL* Director
Donald R. Beall
81
Signatures Titles
RUTH BLOCK* Director
Ruth Block
JOHN H. BRYAN*
John H. Bryan Director
ERROLL B. DAVIS, JR.* Director
Erroll B. Davis, Jr.
RICHARD FERRIS* Director
Richard Ferris
F. A. MALJERS* Director
F. A. Maljers*
ROBERT H. MALOTT* Director
Robert H. Malott
W. E. MASSEY* Director
W. E. Massey
MARTHA R. SEGER* Director
Martha R. Seger
MICHAEL WILSON*
Michael Wilson Director
RICHARD D. WOOD* Director
Richard D. Wood
*By
JOHN L. CARL Individually and as Attorney-in-Fact
John L. Carl
82
SCHEDULE VIII
AMOCO CORPORATION
VALUATION AND QUALIFYING ACCOUNTS(1)
For the Year Ended December 31,
(millions of dollars)
Additions
Balance Charged
at to costs Charged Balance
Description beginning and to other Deductions at end
of year expenses accounts (2) of year
1994
Allowance for doubtful notes
and accounts receivable . . . . . $ 65 $ 27 $ -- $ 69 $ 23
1993
Allowance for doubtful notes
and accounts receivable . . . . . 87 26 -- 48 65
1992
Allowance for doubtful notes
and accounts receivable . . . . . 101 70 -- 84 87
(1) Reserves were deducted from the assets to which they apply in the
Consolidated Statement of Financial Position.
(2) Accounts written off less recoveries and other adjustments.
83
AMOCO CORPORATION
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
3(a) --The Amended Articles of Incorporation of the registrant are
incorporated herein by reference to Exhibit 3(a) to the
registrants's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1985. --
3(b) --By-laws of the registrant as amended December 20, 1994,
included herein.
4 --The registrant will provide to the Securities and Exchange
Commission upon request copies of instruments defining the
rights of holders of long-term debt of the registrant
and its consolidated subsidiaries. --
9 --None. --
10(a) --The 1981 Management Incentive Program of Amoco
Corporation and its Participating Subsidiaries, as amended
through November 29, 1983, is incorporated herein by
reference to Exhibit 10(a) to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1983. --
10(b) --Omitted. --
10(c) --The 1986 Management Incentive Program of Amoco Corporation
and its Participating Subsidiaries, as amended through
April 25, 1989, is incorporated herein by reference to Exhibit
10(c) to the registrant's Annual Report on Form 10-K for the
year ended December 31, 1989. Amendments to the 1986
Management Incentive Program are incorporated herein by
reference to pages 9-16 of Amoco's Proxy Statement dated
March 15, 1991. --
10(d) --Amendments to the 1981 Management Incentive Program
are incorporated herein by reference to pages 22-37 of
Amoco's Proxy Statement dated March 14, 1986. --
10(e) --The 1991 Incentive Program of Amoco Corporation and
its Participating Subsidiaries is incorporated herein by
reference to Exhibit 10(e) to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1991. --
10(f) --Restricted Stock Plan for Non-Employee Directors and Retainer
Stock Plan for Non-Employee Directors are incorporated herein
by reference to pages 20 through 26 of the registrant's Proxy
Statement dated March 16, 1989. --
84
Sequentially
Exhibit Numbered
Number Exhibit Page
10(g) --Amoco Employee Savings Plan as amended and restated,
effective November 29, 1994, is incorporated herein by
reference to Exhibit 10(g) to the registrant's Form S-8
Registration Statement filed March 14, 1995 (No. 33-58063). --
10(h) --Deferral and Restoration Plans not included herein are
incorporated by reference to Exhibit 10(h) to the registrant's
Annual Report on Forms 10-K for the years ended December 31,
1992 and 1993.
--Amoco Performance Share Restoration Plan;
--Deferral Savings Restoration Plan of Amoco Corporation and
Participating Companies;
--ERISA Savings Restoration Plan of Amoco Corporation and
Participating Companies;
--Amoco Corporation Deferred Directors Fee Plan;
--Bonus Deferral Plan for 1991 Incentive Program and Form of
Bonus Deferral Election;
--Performance Unit Deferral Plan and Form of Performance Unit
Plan Payout Deferral Election;
--ERISA Retirement Restoration Plan of Amoco Corporation and
Participating Companies; and
--Deferral Retirement Restoration Plan of Amoco Corporation
and Participating Companies.
11 --None required. --
12 --Statement Setting Forth Computation of Ratio of Earnings to
Fixed Charges for the five years ended December 31, 1994.
13 --None. --
16 --None. --
18 --None. --
21 --Subsidiaries of the registrant.
22 --None. --
23 --Consent of Price Waterhouse.
24 --Powers of Attorney are incorporated herein by reference to
Exhibit 24 to the registrant's Form S-8 Registration Statement
filed March 14, 1995 (No. 33-58063). --
27 --Financial Data Schedule for the year ended December 31, 1994.
28 --None. --
85