SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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, and
Swiss 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, 1998, based on a closing price of $81.375 was
approximately $39,451,000,000.
Number of common shares outstanding as of January 31, 1998,
was 482,203,176 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement dated March 16, 1998
AMOCO CORPORATION
INDEX
Page
PART I
Items 1. and 2. Business and Properties ................... 3
Exploration and Production .............................. 3
Reserves ................................................ 12
Oil and Gas Sales Commitments ........................... 13
Supply and Marketing of NGL ............................. 13
Refining ................................................ 14
Transportation .......................................... 14
Marketing of Petroleum Products ......................... 15
Chemicals ............................................... 16
Other Operations ........................................ 18
Research ................................................ 18
Employees ............................................... 19
Competition ............................................. 19
Government Regulation ................................... 19
Safety, Health and Environmental Protection ............. 20
Executive Officers of the Registrant .................... 22
Item 3. Legal Proceedings ................................. 23
Item 4. Submission of Matters to a Vote of Security Holders 24
PART II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters ............................. 25
Item 6. Selected Financial Data ........................... 26
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 27
Item 8. Financial Statements and Supplemental Information . 40
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ..................... 95
PART III
Item 10. Directors and Executive Officers of the Registrant 95
Item 11. Executive Compensation ........................... 95
Item 12. Security Ownership of Certain Beneficial Owners
and Management .......................................... 95
Item 13. Certain Relationships and Related Transactions ... 95
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K ..................................... 96
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("NGL"), and marketing
of natural gas and NGL.
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 substantially all petroleum and chemical
operating subsidiaries except Amoco Canada Petroleum Company Ltd.
("Amoco Canada"), which is wholly owned by Amoco Corporation, and
selected other activities. Amoco Corporation has guaranteed the
outstanding public debt obligations of Amoco Company. Amoco
Corporation and Amoco Company have guaranteed the notes, bonds and
debentures of Amoco Canada. See Note 10 to the Consolidated
Financial Statements. Summarized financial information relating to
Amoco Company and Amoco Canada is disclosed in Note 23 to the
Consolidated Financial Statements.
Selected financial information by geographic area and industry
segment for the three years ended December 31, 1997, is presented
in Note 24 to the Consolidated Financial Statements.
Exploration and Production
Amoco is engaged in exploration for crude oil and natural 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 and Norway), the Gulf of Suez and Nile Delta (Egypt), West
Africa (Algeria, Angola and Nigeria), Caspian Sea (Azerbaijan and
Kazakstan), South America (Argentina, Bolivia, Colombia and
Venezuela) and Trinidad and Tobago.
Amoco's U.S. production of crude oil, condensate, NGL, and
natural gas is principally in the states of Alabama, Arkansas,
Colorado, Kansas, Louisiana, Mississippi, New Mexico, Oklahoma,
Texas, Wyoming and offshore in the Gulf of Mexico. Foreign crude
oil and natural gas production is located in Argentina, Azerbaijan,
Bolivia, Canada, China, Colombia, Egypt, the Netherlands, Norway,
Sharjah, Trinidad, the United Kingdom and Venezuela.
Worldwide net production of liquid hydrocarbons in 1997
averaged 637,000 barrels per day, about four percent lower than the
1996 level of 662,000 barrels per day. U.S. liquids production
averaged 274,000 barrels per day in 1997, down eight percent from
1996, as a result of normal field declines and property
dispositions. Worldwide net production of natural gas decreased 240
million cubic feet ("mmcf") per day in 1997 and averaged 4,142 mmcf
per day for the year. In the United States, natural gas production
decreased eight percent in 1997, and averaged 2,368 mmcf per day
for the year.
Amoco's net production of oil and gas for the three years
ended December 31, 1997, which includes applicable volumes produced
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)
1997................... 274 61 65 237 637
1996 .................. 297 61 60 244 662
1995 .................. 295 66 64 235 660
Natural gas (millions of
cubic feet per day)
1997 .................. 2,368 761 390 623 4,142
1996 .................. 2,572 815 386 609 4,382
1995 .................. 2,453 842 363 581 4,239
* 1997 includes Amoco's interest in affiliates' production. U.S.
production includes NGL from processing plants in which Amoco has
an ownership interest of 62, 66 and 64 thousands of barrels per day
for the years 1997, 1996 and 1995, respectively.
In early 1997, Amoco and Shell Oil Company completed the
formation of Altura Energy Ltd., a partnership combining their
assets in the Permian Basin area of west Texas and southeast New
Mexico. The partnership is designed to reduce costs and capitalize
on economies of scale. In 1997, Amoco received 110,000 barrels of
oil equivalent per day from its 64 percent interest.
Also in 1997, Amoco formed a partnership called Crescendo
Resources L.P., with a subsidiary of YPF S.A. This partnership owns
and operates reserves of about one trillion cubic feet ("tcf") of
natural gas in the Texas Panhandle and Western Oklahoma.
At year-end 1997, Amoco owned entirely or had an ownership
interest in 42 natural gas processing plants in the United States.
Amoco is the operator of 9 of the plants; Altura Energy Ltd. is the
operator for 11 plants; and Crescendo Resources L.P. is the
operator of 2 plants. A new plant in Kansas, in which Amoco is
operator, is expected to be fully operational by the end of the
first quarter of 1998.
Amoco continued optimization of production from existing
waterflood and improved oil recovery operations in 1997. These
projects are predominately located in the Permian Basin of west
Texas and New Mexico and in Colorado and Wyoming. Collectively
these areas account for approximately 56 percent of Amoco's U.S.
net crude and condensate production.
After conducting several pilot tests of its proprietary
technology in enhanced coalbed methane ("ECBM"), Amoco proceeded
with Tiffany ECBM, its first full-scale commercial ECBM project
located in southwestern Colorado. Initial nitrogen injection began
in January 1998.
Capitalizing on recent advances in 3-D seismic technology,
Amoco drilled 13 consecutive producing wells in the Tuscaloosa
trend of Louisiana. Net proved reserves of 200 billion cubic feet
("bcf") of natural gas and production of 70 mmcf per day of natural
gas were added with these wells. Development of Amoco's holdings in
this trend is anticipated to continue through the turn of the
century.
In the Gulf of Mexico deepwater area, Amoco produced first oil
and natural gas from the Ram-Powell Project, a development with
Shell Oil Company and Exxon Corporation. Amoco's share of total
development expenses for the project is estimated at $260 million.
Development of the $465 million Marlin Project ("Marlin")
began in early 1997. Marlin is located 125 miles southwest of New
Orleans in 3,240 feet of water. Marlin is the first Amoco-operated
deepwater development in the Gulf of Mexico, and will be developed
using a tension leg platform. Construction and drilling operations
began in mid-1997 with production expected by mid-1999. Evaluation
work continues on nearby acreage. Amoco expects to maintain an
active deepwater exploration program in 1998.
Amoco is building and will be operating a cryogenic natural
gas processing plant in Pascagoula, Mississippi to process the
Marlin natural gas. The plant, in which Amoco will have a 60
percent interest, is expected to have a daily processing capacity
of one billion cubic feet of natural gas. The plant is anticipated
to be fully operational in early 1999.
In 1997, Amoco sold non-core oil and gas properties as part of
its strategy to upgrade and refocus the U.S. portfolio of E&P
assets. These properties had a net annual impact on production of
about 20 thousand barrels per day of crude oil and NGL and 120 mmcf
per day of natural gas. Proceeds from these sales and the sale of
an intrastate natural gas pipeline in Texas, approximated $1.2
billion. Additional oil and gas properties identified by the
Corporation as non-core are expected to be sold in 1998.
In Canada, Amoco divested its arctic drilling operations, as
well as other non-core oil and gas properties in western Canada.
Proceeds are mainly being used to maintain natural gas production.
Amoco entered into an alliance with Northstar Energy
Corporation of Calgary ("Northstar") to pursue natural gas
exploration in northeast British Columbia. Northstar will commit
$32 million to exploration and development activities on Amoco's
acreage over the next three years. Amoco also entered into an
agreement with CU Power International Ltd. to develop a steam
enhancement plant. The plant will use natural gas as a fuel source
to efficiently produce steam and electricity for use at Amoco's
Primrose heavy-oil project. Surplus electricity is expected to be
sold to third parties.
In November 1997, Amoco Argentina Oil Company ("Amoco
Argentina")and Bridas Corporation ("Bridas") created a jointly-
owned company called Pan American Energy LLC. ("Pan American"). The
new enterprise is a result of the combination of the respective
assets of Amoco Argentina and Bridas in the southern part of South
America. Pan American is the second largest producer of crude oil
and natural gas in Argentina. Amoco holds a 60 percent interest in
the new venture.
In Bolivia, Amoco owns an interest and assumed operatorship of
a new Bolivian company, Empresa Petrolera Chaco S.A. ("Chaco"), in
April 1997. During 1997, Chaco commenced efforts to increase
liquids production, initiate exploration and drilling operations
and improve facilities.
In China, Amoco completed the Liuhua field program with the
completion of the twenty-fourth well in the South China Sea.
Development was completed significantly ahead of the original plan
and on target with the accelerated plan approved in 1997. Also,
acquisition of 3-D seismic data was approved and completed in 1997,
and is expected to be used to support optimal sidetrack drilling in
1998 and throughout the remaining life of the field.
In Colombia, Amoco completed construction of a pipeline and
facilities necessary to begin natural gas sales from its Opon field
discovery. Net sales of approximately 30 mmcf per day of natural
gas began in late 1997 to Ecopetrol, the Colombian national oil
company. In 1998, Amoco is expected to supply natural gas from the
Opon field to the 200 megawatt Termo Santander power generation
station, which was partially completed in 1997 by Amoco Power
Resources Corporation.
In Egypt, Amoco continues to enjoy success in exploration and
development of natural gas in the Nile Delta. Through its working
interest in a number of partnerships, Amoco participated in 18
commercial gas discoveries in the Nile Delta. In 1997, Amoco and
its partner announced plans to develop the 2 tcf Ha'py field
natural gas discovery in the Nile Delta. Natural gas is expected to
be sold into the expanding Egyptian domestic market beginning in
late 1999. Amoco is also moving ahead with plans for additional
sales to the local Egyptian market over the next few years (net 120
mmcf of natural gas per day on line by 2000), and is exploring
natural gas export opportunities.
In the Netherlands, Amoco successfully completed the
construction of the Peak Gas storage facility. The plant was
officially dedicated in December 1997. The $150 million facility at
Alkmaar will help the Dutch national gas transmission and
distribution company, Gasunie, meet peak demand for natural gas
starting in 1998.
In Norway, ongoing development drilling on the new well
protector platform resulted in the addition of five wells in the 19
well program. Other notable accomplishments included installation
of the new crude oil pipeline and natural gas pipeline to be
commissioned in conjunction with the Ekofisk II rebuild.
In Sharjah, Amoco continued development of the Sajaa Field
using multi-lateral horizontal wells resulting in sustained peak
production. In addition, the first phase of Inlet Compression was
completed resulting in a lower reservoir abandonment pressure.
In Trinidad and Tobago, Amoco enjoyed continued success,
adding 1.3 tcf of natural gas reserves, 25.5 million barrels of
crude oil and condensate reserves and completing three successful
exploration wells. Amoco is participating with a 34 percent
ownership interest in the construction of a new liquid natural gas
("LNG") facility, and is expected to supply 100 percent of the
plant's initial natural gas requirement of approximately 450 mmcf
per day beginning in 1999. Amoco is positioned to supply additional
gas as the LNG facility is expanded. Amoco recently signed two
production sharing contracts with the government of Trinidad and
Tobago. Amoco is the operator and holds a 70 percent interest in
Block 5B and has a 40 percent non-operating interest in Block S11B.
Seismic work on these blocks has been completed and exploration
drilling is scheduled to begin in the second quarter of 1998.
In the United Kingdom, production from the Armada complex
commenced in October 1997, and averaged production of 13,000
barrels of oil equivalent per day to Amoco in the fourth quarter.
Amoco's working interest in the project is 18.2 percent. The export
of natural gas from Armada boosted throughput in the Amoco operated
Central Area Transmission System (CATS). Beacon Gas Limited, whose
principal activity is the distribution of natural gas to the retail
sector and in which Amoco has a 50 percent interest, increased the
number of customers contracted to 150,000.
In Venezuela, gross production commenced in the first quarter
of 1997 in the Deep Jusepin field at approximately 10,000 barrels
of oil per day through a temporary production facility. The rate
was increased to 18,000 barrels per day in October 1997 when the
permanent production facility was completed. Development drilling
is expected to enable gross production at capacity of 30,000
barrels of oil per day by the end of the second quarter of 1998.
Amoco has a 45 percent interest in the Jusepin field. During 1997,
Amoco began exploration programs in the Punta Pescador and
Guarapiche blocks, in which Amoco holds 50 percent and 37.5 percent
interests, respectively. Seismic acquisition is currently under way
with exploratory wells planned in 1998.
In Azerbaijan, Amoco has a 17 percent working interest and is
a leading partner in the Azeri, Chirag, and deepwater Gunashli
project in the Azeri sector of the Caspian Sea. Azerbaijan
International Operating Company ("AIOC") is the operator on behalf
of the partners. In 1997, AIOC completed the minimum work program
and initiated production from the early oil project. Production
from the early oil project is expected to be exported via a
distribution route which runs from Baku to Novorossiysk, Russia. In
1997, work progressed on another distribution route from Baku to
Supsa, Georgia and on phase 1 of the offshore development.
In 1997, Amoco and other partners were awarded the rights to
explore and develop the Ashrafi and Dan Ulduzu prospects in the
Caspian Sea. Amoco is the lead partner with a 30 percent working
interest. North Absheron Operating Company ("NAOC") was formed to
act as operator on behalf of the partners. NAOC completed a 3-D
seismic program and commenced drilling of the first exploration
well.
Average sales prices (including transfers) and production
costs per unit of crude oil and natural gas produced, for the three
years ended December 31, 1997, are as follows:
United
States Canada Europe Other
1997
Average sales prices:
Crude oil (per barrel) ..... $18.47 $14.19 $18.56 $17.85
Natural gas liquids
(per barrel) ............. $12.46 $14.36 $ -- $ --
Natural gas (per thousand
cubic feet ("mcf")) ...... $ 2.15 $ 1.38 $ 2.69 $ 1.19
Average production costs (per
equivalent barrel) (*) ..... $ 4.04 $ 3.48 $ 7.33 $ 4.98
1996
Average sales prices:
Crude oil (per barrel) ..... $20.21 $17.73 $20.94 $19.30
Natural gas liquids
(per barrel) ............. $13.95 $13.73 $ -- $ --
Natural gas (per mcf) ...... $ 1.93 $ 1.15 $ 2.47 $ 1.17
Average production costs (per
equivalent barrel) (*) ..... $ 3.77 $ 3.38 $ 6.23 $ 4.58
1995
Average sales prices:
Crude oil (per barrel) ..... $16.02 $15.15 $17.18 $16.02
Natural gas liquids
(per barrel) ............. $10.00 $ 9.71 $ -- $ --
Natural gas (per mcf) ...... $ 1.35 $ .89 $ 2.45 $ 1.11
Average production costs (per
equivalent barrel) (*) ..... $ 3.54 $ 3.29 $ 5.59 $ 3.93
(*) 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.
Sales prices have declined significantly since December 31,
1997. Reported average sales prices represent recorded revenues for
crude oil and natural 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 crude oil or
natural 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 and in certain
overseas areas, costs related to product transportation expenses.
Data regarding Amoco's exploratory and development drilling
activities during the three years ended December 31, 1997, are
summarized below:
United World-
States Canada Europe Other wide
1997
Net exploratory wells:
Productive .......... 13 15 1 3 32
Dry ................. 9 4 15 6 34
Total ............. 22 19 16 9 66
Net development wells:
Productive .......... 178 115 5 134 432
Dry ................. 9 19 -- 4 32
Total ............. 187 134 5 138 464
Total net wells ... 209 153 21 147 530
1996
Net exploratory wells:
Productive .......... 51 45 -- 13 109
Dry ................. 78 20 5 6 109
Total ............. 129 65 5 19 218
Net development wells:
Productive .......... 273 169 5 112 559
Dry ................. 32 22 -- 6 60
Total ............. 305 191 5 118 619
Total net wells ... 434 256 10 137 837
1995
Net exploratory wells:
Productive .......... 53 71 -- 4 128
Dry ................. 47 24 4 8 83
Total ............. 100 95 4 12 211
Net development wells:
Productive .......... 348 168 6 127 649
Dry ................. 20 10 -- 4 34
Total ............. 368 178 6 131 683
Total net wells ... 468 273 10 143 894
Shown below are wells in process of being drilled at
December 31, 1997:
United World-
States Canada Europe Other wide
Gross wells ...... 179 12 8 25 224
Net wells ........ 69 4 2 21 96
The number of wells owned by Amoco at December 31, 1997, was
as follows:
United World-
States Canada Europe Other wide
Gross wells owned:
Oil wells ...... 22,028 4,623 204 797 27,652
Gas wells ...... 16,114 2,229 194 122 18,659
Total ........ 38,142 6,852 398 919 46,311
Net wells owned:
Oil wells ...... 6,376 2,368 47 699 9,490
Gas wells ...... 9,015 1,419 74 75 10,583
Total ........ 15,391 3,787 121 774 20,073
Multiple completion wells included above:
Gross wells .... 1,608 354 -- 51 2,013
Net wells ...... 713 249 -- 15 977
Amoco's proved and unproved acreage holdings, including
acreage held under reservations, permits, options or similar
arrangements at December 31, 1997, are summarized below:
United World-
States Canada Europe Other wide
(thousands of acres)
Gross acres:
Proved ................ 4,934 2,009 877 898 8,718
Unproved .............. 12,273 3,969 10,023 31,772 58,037
Reservations, permits,
options, etc. ....... 134 3,163 -- -- 3,297
Total ............... 17,341 9,141 10,900 32,670 70,052
Net acres:
Proved ................ 2,262 1,300 243 368 4,173
Unproved .............. 4,241 2,323 4,513 17,286 28,363
Reservations, permits,
options, etc. ....... 32 2,147 -- -- 2,179
Total ............... 6,535 5,770 4,756 17,654 34,715
Reserves
This section should be read in conjunction with data on
reserves presented in "Supplemental Information" to the
Consolidated Financial Statements.
Amoco replaced 178 percent of its production on an oil-energy
equivalent basis during 1997, excluding ownership changes.
Including the sales and purchases of properties, which primarily
involved sales of interests in the United States and Canada, the
production replacement rate was 147 percent. The tables in the
"Supplemental Information" section set forth, by geographic area,
net proved reserves as of December 31, 1997, 1996, 1995, and 1994
including reserves in which Amoco holds economic interest under
production sharing and other types of operating agreements with
foreign governments. Also included are Amoco's proportionate
economic interest in estimated proved reserves of equity affiliates
in Argentina and Bolivia.
Adding to 1997 reserves were discoveries and extensions in the
United States, Egypt, Argentina, Canada, Sharjah, the United
Kingdom and Trinidad. Major improved recovery additions occurred in
Argentina, Sharjah, Egypt, the United Kingdom and the United
States. There were also significant upward revisions in crude oil
in the United States, Egypt, Norway and Trinidad, and significant
natural gas revisions in Canada, Bolivia and Trinidad. Downward
revisions of natural gas reserves occurred in the United States. As
of March 1, 1998, no major discovery or significant event had
occurred that would have a material effect on the estimated proved
reserves reported at December 31, 1997.
Shown below are estimated proved reserves as of December 31,
1997 and 1996:
Crude Oil & NGL Natural Gas
(millions of barrels) (billions of cubic feet)
Consoli- Affil- Consoli- Affil-
dated iates Total dated iates Total
Net proved reserves:
December 31, 1997 2,253 164 2,417 20,088 1,368 21,456
December 31, 1996 2,423 -- 2,423 20,346 -- 20,346
Net proved developed
reserves:
December 31, 1997 1,646 120 1,766 13,097 807 13,904
December 31, 1996 1,882 -- 1,882 14,166 -- 14,166
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 natural gas from its producing operations under a
variety of contractual arrangements. Amoco has several natural gas
sales contracts that specify obligations to make available fixed
and determinable quantities.
Amoco has 39 such contracts in the United States which, as of
December 31, 1997, provide for the delivery over the next three
years of 507 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 of approximately
16 bcf of natural gas over the next three years. Amoco expects this
commitment to be fulfilled from reserves currently being developed.
In Trinidad and Tobago, Amoco entered into a long-term gas
sales contract with Atlantic LNG Company in 1996. Deliveries are
expected to commence in 1999 and approximate 79 bcf of natural gas
in that year. Amoco expects this commitment to be fulfilled from
reserves currently being developed.
Amoco Canada has 20 outstanding natural gas contracts as of
December 31, 1997. Over the next three years, deliveries under
these contracts total approximately 527 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,
an index basis, are negotiated annually, or are converted from
fixed prices to market prices through the use of swaps (see Note 4
to the Consolidated Financial Statements and Supplemental Data).
Supply and Marketing of NGL
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 NGL for 1997, 1996 and 1995 averaged 189,000 barrels per
day, 200,000 barrels per day, and 204,000 barrels per day,
respectively.
Amoco owns or has interest in four fractionator plants in
Canada and the United States. Two are located in Canada in Fort
Saskatchewan and Sarnia and two are located in the United States in
Hobbs, New Mexico and Mont Belvieu, Texas. In 1997, Amoco acquired
a 12 percent interest in the Mont Belvieu plant, which has a design
capacity to process 200,000 barrels per day of raw NGL mix.
Refining
Amoco owns and operates five refineries in the United States.
The daily operable capacity of these refineries in 1997 is shown
below:
Daily
Operable
Capacity
Location of Refinery (barrels)
Texas City, Texas ........................... 433,000
Whiting, Indiana ............................ 410,000
Mandan, North Dakota ........................ 58,000
Yorktown, Virginia .......................... 57,000
Salt Lake City, Utah ........................ 52,000
Total ..................................... 1,010,000
Daily input to crude units averaged 938,000 in 1997, 954,000
barrels in 1996 and 926,000 barrels in 1995. Crude unit utilization
was 92.9 percent in 1997 compared with 94.6 percent in 1996,
primarily reflecting planned maintenance on a major crude
processing unit. Refinery investments focused on chemical feedstock
production, sustaining reliable operations, increasing crude oil
flexibility, and environmental compliance.
Transportation
Amoco operates extensive transportation facilities for crude
oil, refined products, NGL, carbon dioxide ("CO2")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. Indirectly, the system serves
some 35 refineries of other companies through connecting common
carrier pipelines. In addition, the refined petroleum product
system is connected to three refineries. Chemical feedstock lines
receive product directly from Amoco refineries and other Amoco and
non-Amoco facilities, and deliver directly to various plants. NGL
is gathered and then transported through a system of owned,
partially owned and common carrier pipelines in Canada and the
United States. In total, Amoco's pipeline network in North America
aggregates over 15,000 miles. In 1997, shipments through Amoco's
pipeline system in North America totaled 442 million barrels of
crude oil and 397 million barrels of refined products and
feedstocks.
Minority interests are also owned in 11 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.
In 1997, Amoco acquired an equity interest in the Longhorn
Partners Pipeline, Inc., a joint-venture pipeline company that will
use new and existing assets to move refined products from Houston
to El Paso starting in late 1998. In February 1997, a pipeline from
Billings, Montana, to Elk Basin, Wyoming, built as part of a joint
venture with Conoco to ship Canadian crude oil to Salt Lake City
and Denver, became operational. The pipeline will increase the
availability of Canadian crude oil to the Salt Lake City refinery,
supporting refining and marketing plans for the northern Rocky
Mountain states.
Development of the Destine Pipeline system to transport
hydrocarbons from Marlin to onshore Mississippi was approved in
1997. The Destine Pipeline system is jointly owned by Amoco, Shell
Oil Company and Sonnet Exploration. The pipeline will be used to
move product into the natural gas processing plant in Pascagoula,
Mississippi.
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 North America.
As of December 31, 1997, Amoco owned three U.S. Flag
tug/barges and bareboat chartered another tug/barge, giving Amoco
an aggregate of 79 thousand deadweight tonnage ("DWT"). In February
1997, Amoco sold a U.S. Flag tug/barge with an aggregate of 21
thousand DWT. Amoco was also committed under long-term time
charters to three international flag tankers, totaling 240 thousand
DWT. An additional 350 thousand DWT was time chartered on a short-
term basis, of which 51 thousand DWT was for a U.S. Flag tanker.
Marketing of Petroleum Products
The principal refined products manufactured and marketed by
Amoco are gasolines, diesel fuels, jet fuels, heating oils,
asphalt, residual fuels, motor oils, greases and lubricants. 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 AMOCO, PERMALUBE, ULTIMATE, SILVER and in the
midwestern states, STANDARD. Amoco also sells large quantities of
liquefied petroleum gas and NGL, and offers convenience merchandise
and related services to motorists, some of which are marketed under
the CERTICARE and SPLIT SECOND brand names.
In the United States, Amoco's marketing of petroleum products
is concentrated in the midwest, east and southeast. Amoco supplies
about 9,300 gasoline retail outlets, of which approximately 3,200
are either owned or leased. Most of these outlets are independently
operated. Amoco continues to reposition its marketing operations by
acquisitions, asset recapitalization and construction of high
volume facilities, including cobranded sites with retailers such as
McDonald's Corporation. In 1997, petroleum products sales volumes
averaged 1.2 million barrels per day in the United States, about
the same as in 1996. Gasoline sales increased five percent during
1997, and averaged 660,000 barrels per day for the year.
Distillates sales averaged 339,000 barrels per day, about eight
percent lower than in 1996.
U.S. sales volumes of petroleum products for the three years
ended December 31, 1997, are detailed below:
1997 1996 1995
(thousands of barrels per day)
United States:
Gasoline .............. 660 630 614
Distillates ........... 339 370 366
Other products ........ 204 201 191
Total ............... 1,203 1,201 1,171
Chemicals
Amoco produces and markets a variety of petroleum-based
chemicals worldwide. Chemical feedstocks include paraxylene ("PX"),
metaxylene, olefins, and styrene used as raw materials for other
chemical product lines. Chemical intermediates include purified
terephthalic acid ("PTA"), the preferred raw material for the
manufacture of polyester; purified isophthalic acid ("PIA") used
for isopolyester resins and gel coats; trimellitic anhydride used
principally in plasticizers; polybutene used in lubricating oil
additives; dimethyl-2,6-naphthalene dicarboxylate, commonly known
as "NDC", used for photographic film and specialized packaging;
linear alpha-olefins used for polyethylene, detergents and
plasticizers; and poly alpha-olefins used as base stock for
synthetic lubricants. Polymers include polypropylene used for
molded products, fibers and films; engineering polymers used for
medical, automotive and electronic applications; and carbon fibers
used in sporting goods and aerospace applications. Fabrics and
fibers are primarily used in carpet backing, home furnishings and
industrial uses such as civil engineering fabrics and bulk bags.
Amoco's principal North American chemical and plastic products
facilities are located at Alvin, Baytown, Deer Park, Pasadena and
Texas City, Texas; Decatur and Roanoke, Alabama; Greenville, Rock
Hill, Seneca, Spartanburg, and the Cooper River plant near Mount
Pleasant, South Carolina; Rocky Mount, North Carolina; Atlanta,
Augusta, Bainbridge, Hazlehurst and Nashville, Georgia; Joliet,
Illinois; Afton, Virginia; Marietta, Ohio; Hawkesbury and
Brantford, Ontario and Matehuala, Mexico.
A wholly owned chemical plant at Geel, Belgium manufactures
PTA, PIA and polypropylene. Facilities for the fabrication of
carpet backing and industrial cloth from polypropylene are located
in the United Kingdom, Germany, Australia and Brazil. In 1997,
Amoco began operations at a carpet-backing plant in Gyor, Hungary.
Linear alpha-olefins and poly alpha-olefins are processed at a
plant in Feluy, Belgium.
In 1997, Amoco's PTA plant in Kuantan, Malaysia was expanded
by 100,000 metric tons in mid-year. Amoco's PTA joint-venture plant
in Indonesia was successfully started in September 1997. A 500,000
ton PTA unit in Mount Pleasant, South Carolina came onstream in
June 1997. Construction continues on a new 500,000 ton Geel,
Belgium PTA unit, which is scheduled to start in the second quarter
of 1998.
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 Indonesia; 50 percent in Taiwan; 35 percent in South
Korea; and 9 percent in Mexico. Amoco holds a 40 percent interest
in Singapore Aromatics Company, which operates an aromatic complex
that includes 350,000 tons of PX capacity.
The following table sets forth chemical segment revenues for
the three years ended December 31, 1997:
1997 1996 1995
(millions of dollars)
Chemical feedstocks ........ $ 1,230 $ 745 $ 704
Chemical intermediates ..... 2,607 2,533 2,622
Polymers ................... 980 938 890
Fabrics and fibers ......... 927 963 970
Foam products .............. -- 181 288
Other ...................... 646 409 243
Total worldwide .......... $ 6,390 $ 5,769 $ 5,717
Other Operations
Amoco has a wholly owned real estate subsidiary, AmProp, Inc.
("AmProp"), which was formed in late 1988. AmProp was established
to develop a portfolio of actively managed real estate investments.
The real estate investments have been developed in partnerships
with local developers. One such venture, the Cantera development
west of Chicago, began occupancy in 1997 and will eventually
consist of nine million square feet of office, light-industrial,
and multi-family residential units. The project will also include
retail, hotel, and recreational developments.
Amoco conducts certain non-petrochemical technology
development through a separate operating subsidiary, Amoco
Technology Company. Currently, the operating company has interests
in two areas of major focus: photovoltaics (solar power) and
genomic disease management.
Amoco/Enron Solar, a partnership with Enron Corporation,
manufactures and markets semicrystalline and amorphous silicon
modules that produce electricity directly from sunlight, as well as
develops solar powered electric generation facilities.
Vysis, Inc. is a genomic disease management company that
develops, commercializes and markets clinical products that provide
information critical to the evaluation and management of cancer,
prenatal disorders and other genetic diseases. The company
currently markets five clinical products cleared by the Food and
Drug Administration, more than 240 research products, an integrated
line of genetic imaging workstations and other instruments for
cytogenetic analysis. In February 1998, Vysis, Inc. completed a
public offering of its common stock. Amoco retains a 69 percent
interest in this previously wholly owned venture.
Amoco has retained LaSalle Partners to handle the possible
sale of the Amoco Building in Chicago, Illinois, the headquarters
of Amoco.
Research
Research operations are conducted primarily at five research
locations. At Tulsa, Oklahoma, research activities are directed
toward new and improved methods for finding and producing crude oil
and natural gas. In 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,
and refining of crude oil. The Alpharetta, Georgia, research
facility also conducts research for polymers and engineered resins,
and at Austell, Georgia, research and development activities focus
on extending and creating synthetic fabrics, fibers, yarns and
related processing equipment. Research and development in support
of genetic research and products is carried out at Downers Grove,
Illinois.
Expenditures for research and technology development
activities totaled $151 million in 1997, $171 million in 1996 and
$175 million in 1995. An average of 834, 854 and 1,000 professional
employees were engaged full-time in these activities during 1997,
1996 and 1995, respectively.
Employees
Amoco had 43,451 employees in its worldwide operations as of
December 31, 1997. Of this total, 32,726 were located in the United
States, with approximately 16 percent represented by various labor
organizations. The remaining 10,725 employees were located in non-
U.S. countries, of which approximately 28 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. In 1997, Amoco was the largest
corporate producer of natural gas in the United States. Amoco
believes that it ranked sixth in crude oil and natural gas liquids
production in the United States in 1997. Amoco sells petroleum
products in 33 states and the District of Columbia. 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 6.7 million metric tons, including joint ventures.
Amoco is also the world's leading manufacturer of paraxylene with
annual production capacity of 2.1 million metric tons, including
joint ventures. Amoco has operations in approximately 30 countries.
In addition, the discussion under the headings "Exploration and
Production," "Reserves," "Oil and Gas Sales Commitments," "Supply
and Marketing of NGL," "Refining," "Transportation," "Marketing of
Petroleum Products," "Chemicals," "Other Operations" and "Research"
in Items 1 and 2 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 crude oil. The Interstate Commerce
Act requires 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
crude 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 was 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 0.12 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 (4) an underground storage tank tax, which is
imposed at a rate of 0.1 cent per gallon of gasoline and certain
other fuels. Effective January 1, 1996 the Superfund tax expired.
However, part (4) the underground storage tank tax was reimposed
effective October 1, 1997, at the same rate and on the same fuels
as previously imposed. The other parts of the Superfund tax are
subject to reauthorization by Congress.
Safety, Health and Environmental Protection
Amoco facilities and products are subject to a large body of
national and local laws and regulations regarding protection of
human health, safety and the environment. The Corporation is
committed to safety, health and environmental stewardship, as
reflected in its policies and programs. An auditing program
periodically evaluates and assures the integrity and effectiveness
of safety, health and environmental management systems in use at
Amoco facilities and operations worldwide. The Amoco Crisis
Management system seeks to provide rapid and effective response in
the event of an emergency at Amoco operations.
Amoco's chemical and petroleum products are manufactured and
sold in compliance with numerous laws and regulations related to
product safety. The Corporation has a product stewardship program
to evaluate the safety, health and environmental aspects of its
products, to obtain necessary country-specific clearances for the
sale of products, and to provide information to employees and
customers on the safe and environmentally sound use of Amoco
products. Additionally, Amoco's refining and marketing operations
continue to adapt to current and future reformulated gasoline
requirements under clean air laws.
Amoco's operations face strict controls on release of
pollutants to the air, water, soil and ground water. Process
equipment and pollution control devices continue to be upgraded or
added to meet environmental standards. Waste handling and treatment
strategies are reviewed and adjusted to meet requirements for
environmental protection.
Remediation of contaminated sites under the Resources
Conservation and Recovery Act, the federal Superfund law, and
similar state laws is ongoing and will continue for the foreseeable
future. Existing and potential remediation obligations are
identified through an assessment program, and numerous projects are
under way to address the contamination found. The Corporation is
also subject to claims made for natural resource damages under
several federal laws.
In the future, new laws or regulations intended to address
global climate change could impact emission monitoring or reduction
requirements at Amoco operations and facilities. Such requirements
also might have impacts on manufacturing processes, product
formulation or product characteristics.
Amoco's 1997 capital expenditures for existing environmental
regulations totaled $89 million. In addition, Amoco spent $292
million for related operating costs and research and development,
and $59 million for mandated and voluntary remediation projects.
Remediation costs in 1998 are expected to approximate the 1997
level. Capital expenditures in the environmental area are expected
to be approximately $96 million in 1998. In 1999, approximately the
same level of environmental spending is expected.
Executive Officers of the Registrant
Certain information required by Item 10 with respect to
executive officers is incorporated by reference to pages 2-7 of
Amoco's Proxy Statement dated March 16, 1998. The following table
sets forth information concerning other executive officers of Amoco
as of March 1, 1998:
Served
as
Executive
Officer
Name Principal Occupation Age Since
John F. Campbell . Senior vice president, human 54 1998
resources
John L. Carl ..... Executive vice president and 50 1991
chief financial officer
James E. Fligg ... Senior executive vice president, 61 1991
strategic planning and
international business development
L. Richard Flury . Executive vice president, 50 1994
exploration and production sector
W. Douglas Ford .. Executive vice president, 54 1992
petroleum products sector
Enrique J. Sosa .. Executive vice president, 57 1995
chemicals sector
George S. Spindler Senior vice president, law and 60 1989
corporate affairs
David F. Work .... Senior vice president, shared 52 1996
services
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 Enrique J. Sosa, have
been employed by Amoco or its subsidiaries for more than five
years.
John F. Campbell was appointed Senior Vice President, Human
Resources effective January 1, 1998 replacing R. Wayne Anderson.
From April 1996 through December 1997, John F. Campbell was the
Vice President of Human Resources for Corporate People Strategies.
He was named Vice President Corporate People Strategies and
Chemicals Sector HR Contact Executive in April 1997 and Vice
President Executive Resources and Chemicals Sector HR Contact
Executive in January 1995. Prior to that time, Mr. Campbell had
been General Manager Executive Resources since 1992 and progressed
through a series of Human Resources managerial positions between
1967 and 1992.
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 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.
L. Richard Flury was appointed Executive Vice President,
Exploration and Production Sector, effective January 1, 1996. L.
Richard Flury was elected Senior Vice President, Shared Services in
July 1994. 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.
W. Douglas Ford was elected Executive Vice President,
effective July 1, 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. In February
1991, W. Douglas Ford was named Executive Vice President of Amoco
Oil Company.
Enrique J. Sosa was appointed Executive Vice President,
Chemicals Sector, effective October 1, 1995. From 1990, Enrique J.
Sosa was Senior Vice President of Dow Chemical Company and
President of Dow North America.
David F. Work was appointed Senior Vice President, Shared
Services, effective January 1, 1996. David F. Work joined Amoco in
1970 and was Group Vice President of Worldwide Exploration for
Amoco Production Company from February 1992 to the effective date
of his current appointment.
Except as previously described, others shown in the table on
the previous page, 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
Twelve proceedings instituted by governmental authorities are
pending or known to be contemplated against Amoco and certain of
its subsidiaries under federal, state or 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 $7.25 million.
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 1992. 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 filed a petition in the U.S. Tax Court contesting the
IRS statutory Notice of Deficiency. Trial on the matter was held in
April 1995, and a decision was rendered by the U.S. Tax Court in
March 1996, in Amoco's favor. The IRS appealed the Tax Court's
decision to the U.S. Court of Appeals for the Seventh Circuit, and
on March 11, 1998, the Seventh Circuit affirmed the Tax Court's
prior decision. A comparable adjustment of foreign tax credits for
each year has been proposed for the years 1983 through 1992 based
upon subsequent IRS audits. The Corporation believes that the
foreign income taxes have been reflected properly in its U.S.
federal tax returns. 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.
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 with 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, 1997.
___________________________________
PART II
Item 5. Market for the Registrant's Common Stock 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 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.
Cash
Market Prices Dividends
High Low Per Share
1997
First quarter ..... $ 91 5/8 $ 80 1/4 $ .70
Second quarter .... $ 91 7/8 $ 79 1/4 $ .70
Third quarter ..... $ 99 $ 87 $ .70
Fourth quarter .... $ 98 3/8 $ 81 13/16 $ .70
1996
First quarter ..... $ 74 1/8 $ 67 1/2 $ .65
Second quarter .... $ 75 1/8 $ 69 1/2 $ .65
Third quarter ..... $ 72 5/8 $ 65 $ .65
Fourth quarter .... $ 83 1/2 $ 70 1/4 $ .65
Year-end 1997 and 1996 market prices were $85 1/8 and $80 1/2,
respectively.
Amoco had 134,029 shareholders of record at December 31, 1997.
The quarterly cash dividend was raised to 75 cents per share,
effective with the first quarter 1998 dividend.
Amoco declared a two-for-one split of each share of common
stock outstanding on March 31, 1998.
Item 6. Selected Financial Data
The following selected financial data, as it relates to the
years 1993 through 1997, have been derived from the consolidated
financial statements of Amoco, including the consolidated statement
of financial position at December 31, 1997 and 1996 and the related
consolidated statement of income and consolidated statement of cash
flows for the three years ended December 31, 1997, and the notes
thereto, appearing elsewhere herein.
1997 1996 1995 1994 1993
(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) $31,910 $32,150 $27,066 $26,048 $25,336
Net income .............. $ 2,720 $ 2,834 $ 1,862 $ 1,789 $ 1,820
Net income per share
(basic) ............... $ 5.55 $ 5.69 $ 3.76 $ 3.60 $ 3.66
Net income per share
(assuming dilution) ... $ 5.52 $ 5.67 $ 3.75 $ 3.57 $ 3.63
Cash dividends per share $ 2.80 $ 2.60 $ 2.40 $ 2.20 $ 2.20
Ratio of earnings to
fixed charges (*) ..... 9.1 10.3 6.9 8.9 8.0
Balance sheet data-At
December 31:
Total assets ............ $32,489 $32,100 $29,845 $29,316 $28,486
Long-term debt .......... $ 4,639 $ 4,153 $ 3,962 $ 4,387 $ 4,037
Shareholders' equity .... $16,319 $16,408 $14,848 $14,382 $13,665
Shareholders' equity per
share ................. $ 33.79 $ 33.00 $ 29.91 $ 28.97 $ 27.53
(*) 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.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Highlights 1997 1996 1995
Net income (millions) ....... $ 2,720 $ 2,834 $ 1,862
Net income per share (basic). $ 5.55 $ 5.69 $ 3.76
Net income per share
(assuming dilution) ....... $ 5.52 $ 5.67 $ 3.75
Cash dividends per share .... $ 2.80 $ 2.60 $ 2.40
Return on average
shareholders' equity ...... 16.6% 18.1% 12.7%
Return on average
capital employed .......... 13.2% 13.8% 10.3%
Net income for 1997 was $2.7 billion, second only to record
1996 earnings of $2.8 billion, and $800 million above the $1.9
billion earned in 1995. Year-to-year comparisons of net income were
affected by significant unusual items summarized in the table
below.
incr.(decr.) net income 1997 1996 1995
(millions of dollars)
Net asset dispositions
and impairments ........... $ 271 $ 153 $ (297)
LIFO inventory .............. -- 90 --
Amoco's continued aggressive portfolio management in 1997
focused on investing in significant growth opportunities while
identifying non-strategic assets to be divested. Earnings in 1997
included $271 million of net gains from asset dispositions,
primarily the sale of non-core oil and gas properties in the United
States. Asset sales in the United States, including the sale of a
natural gas pipeline unit in Texas, generated proceeds of about
$1.2 billion. Additional sales of U.S. oil and gas properties are
expected to be completed in early 1998.
Included in 1996 earnings were gains of $97 million on the
sale of Amoco's polystyrene foam products business and $56 million
on the sale of certain Canadian oil and gas properties, and a $90
million gain from a reduction in last-in, first-out ("LIFO")
inventory levels. Earnings in 1995 included an $83 million gain on
the sale of Amoco Motor Club; non-cash charges of $380 million
associated with asset impairments reduced 1995's income.
Excluding these unusual items for all periods, 1997 earnings
of $2,449 million were five percent below 1996 earnings of $2,591
million, but were 13 percent above 1995 earnings of $2,159 million.
Earnings in 1997 benefited from higher natural gas prices and
improved refining operations and petroleum product sales margins.
Also benefiting 1997 results were continued efficiencies accruing
from Amoco's Shared Services operations. Adversely affecting 1997
earnings were lower crude oil prices and lower production volumes.
Chemical earnings were below 1996 levels, as excess industry
capacity put downward pressure on sales prices and margins,
especially for paraxylene ("PX"). Higher corporate expenses
reflecting increased interest expense, adverse currency effects and
revised estimates of tax obligations, also contributed to the
decline.
Sales and other operating revenues totaled $32 billion for
1997, about the same as in 1996. Natural gas revenues increased
five percent primarily as the result of higher prices. Chemical
revenues increased by seven percent, as higher sales volumes
associated with capacity additions and acquisitions more than
offset lower prices. Refined product and crude oil revenues
declined four percent and six percent, respectively, mainly
reflecting lower prices.
Equity in income of affiliates and other income of $926
million in 1997 was $350 million above 1996, primarily reflecting
the gain on U.S. non-core exploration and production ("E&P")
property dispositions.
Total costs and expenses on a worldwide basis totaled $33
billion, a slight increase from 1996. Operating expenses increased
eight percent primarily resulting from higher refinery maintenance
costs and costs associated with the start-up of production in
Venezuela and Bolivia, increased activity in Trinidad and higher
maintenance costs related to operations in the North Sea and the
United States. Interest expense increased $209 million in 1997,
reflecting an increase in long-term debt, as well as interest
expense associated with revised estimates of tax obligations. Lower
selling and administrative expenses, exploration expenses and costs
for purchased materials and products were partly offsetting. Net
income also benefited from favorable prior-year tax adjustments.
Industry Segments
In 1997, Amoco changed the basis upon which operations are
grouped for the purpose of business segment reporting to maintain
alignment with changes made in its internal structure. Canadian
supply and marketing operations for crude oil, sulfur and natural
gas liquids ("NGL") are now included in the petroleum products
segment. Previously, those businesses were reported in the Canadian
E&P segment. Segment earnings for prior years have been restated to
conform to the new basis.
Results on a segment basis, for the five years ended December
31, 1997, are presented in the table below:
Consolidated Results on a Segment Basis
1997 1996 1995 1994 1993
(millions of dollars)
Exploration and production
United States .......... $1,447 $1,132 $ 463 $ 820 $ 826
Canada ................. 195 201 (102) 113 347
Europe ................. 145 118 88 (65) (102)
Other .................. 193 333 245 76 (48)
Subtotal ............. 1,980 1,784 694 944 1,023
Petroleum products ....... 587 528 491 496 815
Chemicals ................ 493 735 963 485 222
Corporate and other
operations* ............ (340) (213) (286) (136) (240)
Net income ........... $2,720 $2,834 $1,862 $1,789 $1,820
*Corporate and other operations include net interest and general
corporate expenses, and the results of investments in technology
companies, real estate interests and other activities.
Exploration and Production
Worldwide
Exploration and Production earnings totaled $1.6 billion in
1997, excluding net gains of $352 million associated with the
disposition of non-strategic properties, compared with earnings of
$1.8 billion in 1996. Higher worldwide natural gas prices favorably
affected 1997 results. More than offsetting this favorable factor
were lower crude oil and NGL prices and a decline in North American
crude oil and natural gas production, due to normal field declines
and dispositions.
Worldwide, Amoco produced 637,000 barrels per day of crude oil
and NGL and 4.1 billion cubic feet ("bcf") per day of natural gas.
Production declined the equivalent of 65,000 barrels per day from
1996, reflecting normal field declines and dispositions, primarily
in the United States. The production decline was mitigated by
incremental or new production in Colombia, Venezuela, Argentina and
Bolivia. These new areas along with production in Azerbaijan are
projected to add about 50,000 oil-equivalent barrels per day to
1998 production.
In 1997, Amoco replaced 178 percent of its production
(excluding ownership changes) with new reserves. This was the fifth
consecutive year in which reserve additions, (improved recovery,
discoveries and revisions) exceeded production. Exploration
activities focused on 20 countries in 1997. Amoco's worldwide
exploration drilling success rate was 48 percent. Success in recent
years came from a combination of new technology, such as 3-D
seismic imaging -- utilized over the past few years -- and
concentrating on selected countries.
United States
United States E&P operations earned $1.4 billion in 1997.
Excluding gains of $329 million related to non-core property
dispositions, 1997 earnings of $1,118 million were comparable with
1996 earnings of $1,132 million. Higher natural gas prices and
lower exploration expenses of $41 million before tax favorably
affected 1997 results. These favorable factors were offset by lower
crude oil prices and production volumes.
Amoco's average U.S. natural gas prices of $2.15 per thousand
cubic feet ("mcf") in 1997 increased $.22 per mcf from 1996.
Amoco's U.S. crude oil prices averaged $18.47 per barrel, down over
$1.70 per barrel from 1996, reflecting the effect of more than
adequate crude oil supplies.
U.S. natural gas production averaged 2.4 bcf per day in 1997,
down eight percent from 1996. Crude oil and NGL production averaged
274,000 barrels per day, also down eight percent from 1996. The
decline in production resulted from normal field declines and
property dispositions.
Canada
Canadian E&P operations earned $195 million in 1997, compared
with earnings of $201 million in 1996. A gain of $56 million on
asset dispositions, including Amoco's remaining investment in
Crestar Energy Inc., benefited 1996 earnings. Higher natural gas
prices and a gain on the sale of Amoco's arctic drilling unit of
$35 million impacted 1997 earnings.
Amoco's 1997 Canadian natural gas prices averaged $1.38 per
mcf, $.23 per mcf over 1996 levels. Crude oil prices of $14.19 per
barrel in 1997 were down $3.54 per barrel, reflecting lower
industry prices and increased heavy-oil production.
Amoco's Canadian natural gas production of 761 million cubic
feet ("mmcf") per day in 1997 declined seven percent from 1996
levels due to normal field declines and property dispositions.
Crude oil and NGL production averaged 61,000 barrels per day, the
same as in 1996, as increased heavy-oil production offset normal
field declines and dispositions. In 1997, heavy-oil production
averaged 28,000 barrels per day, up from 20,000 barrels per day in
1996.
Overseas
European exploration and production operations earned $145
million in 1997, $27 million higher than the $118 million earned in
1996. The increase in 1997 earnings primarily reflected higher
crude oil and natural gas production, higher natural gas prices and
a gain on a property disposition. Partly offsetting these factors
were lower crude oil prices, higher exploration expenses of $18
million before tax and higher operating expenses.
Exploration and production operations in other overseas areas
earned $193 million in 1997, down from the $333 million earned in
1996. Higher operating expenses, mainly reflecting start-up of
production and increased maintenance costs, and lower crude oil
prices and production, more than offset increased natural gas
prices and production.
Overseas crude oil and NGL production averaged 302,000 barrels
a day, a slight decline from 1996, primarily reflecting lower
production in China and Egypt. Partly offsetting the decline was
new production in Venezuela and Bolivia and increases in Norway and
the United Kingdom. Natural gas production increased two percent to
1,013 mmcf per day, primarily from new production in Argentina and
Bolivia.
Petroleum Products
Petroleum products operations earned $587 million in 1997,
compared with earnings of $528 million in 1996. The drawdown of
inventories valued under the LIFO method benefited operations in
1996 by $90 million. Adjusting for that item, 1997 earnings were
$149 million higher than 1996 earnings of $438 million, reflecting
improved refinery operations and higher U.S. refined product
margins and volumes. Refined product margins increased 2.4 cents-
per-gallon during 1997 as declining crude oil costs more than
offset the 2.5 cents-per-gallon decline in the average selling
prices.
Petroleum product sales volumes averaged 1.4 million barrels
per day in 1997, about the same as 1996. Gasoline sales averaged
660,000 barrels per day, an increase of five percent, in response
to new and aggressive marketing initiatives. Distillate sales
volumes averaged 339,000 barrels per day. The refinery utilization
rate averaged 93 percent of rated capacity in 1997, compared with
95 percent in 1996, primarily reflecting planned maintenance on a
major crude processing unit. The refinery yield rate was at 107.0
percent in 1997, the same as in 1996.
Chemicals
Chemical operations earned $493 million in 1997, compared with
1996 earnings of $735 million. Charges related to the anticipated
disposition of certain non-core chemical operations lowered 1997
earnings by $81 million, while 1996 earnings included a gain of $97
million from the sale of Amoco's polystyrene foam products
business.
Adjusting both years for these items, 1997 earnings of $574
million were ten percent lower than 1996. The lower earnings in
1997 mainly reflected a decline in PX margins and the absence of
foreign investment incentives. Partially offsetting were increases
in purified terephthalic acid ("PTA") and PX sales volumes,
reflecting capacity additions, and higher olefins margins. In 1997,
produced volumes for PX increased about 30 percent; polypropylene
sales volumes were up 11 percent; and PTA sales volumes increased
23 percent. Overall, chemicals' capacity utilization rates averaged
93 percent in 1997 and 94 percent in 1996.
Corporate and Other Operations
Corporate and other operations include net interest and
general corporate expenses, and the results of investments in
technology companies, real estate interests and other activities.
This segment incurred net after-tax expenses of $340 million in
1997, compared with net expenses of $213 million in 1996. The
increase in corporate and other operations expenses primarily
reflected an increase in interest expense resulting from higher
corporate debt balances, revised estimates of tax obligations,
including associated interest expense, and adverse currency effects
of $38 million.
1996 vs. 1995
Excluding unusual items, 1996 earnings of $2,591 million
increased 20 percent over 1995 earnings of $2,159 million. Higher
crude oil and natural gas prices and an increase in worldwide
natural gas production contributed to the improvement. Offsetting
those favorable items were lower chemical and petroleum product
earnings resulting from lower margins.
U.S. exploration and production operations earned $1.1 billion
in 1996 compared with $463 million in 1995. After-tax charges of
$234 million for impairment of crude oil and natural gas producing
properties were included in 1995 earnings. Excluding that item,
1996 earnings increased by $435 million, mainly reflecting a 43
percent increase in Amoco's average natural gas prices and a 26
percent increase in Amoco's average crude oil prices.
Earnings outside the United States for exploration and
production operations were $652 million, an increase of $421
million over 1995. The improvement in earnings primarily reflected
higher crude oil and natural gas prices and higher natural gas
production volumes. Included in the 1996 results were gains on the
sale of assets of $56 million. Included in 1995 earnings were
impairment charges of $93 million.
In 1996, petroleum products earnings of $528 million compared
with earnings of $491 million for 1995. The drawdown of inventories
valued under the LIFO method benefited 1996 results by $90 million.
Included in 1995 earnings were an after-tax gain of $83 million
from an asset sale and an after-tax impairment charge of $11
million. Adjusting both years, 1996 adjusted earnings were $438
million compared with $419 million for 1995.
The slight increase in petroleum products earnings reflected
higher Canadian supply and marketing earnings, higher sales volumes
and a gain on an asset sale. Offsetting these factors were lower
refining margins and higher expenses related to international
business development. In late 1996, Amoco decided to sell its
retail outlets in Central Europe as part of the Corporation's
strategy to concentrate on retail marketing operations in North
America. The Corporation completed the sale of those facilities in
1997.
In 1996, chemical operations earned $735 million compared with
1995 earnings of $963 million. Included in 1996 earnings was a gain
of $97 million from the sale of Amoco's polystyrene foam products
business. Included in 1995 earnings were charges of $42 million
related to the impairment of specialty polymer facilities. After
adjusting for special items, 1996 earnings of $638 million were 37
percent lower than adjusted 1995 earnings.
The decrease in chemicals earnings was primarily related to a
sharp drop in margins for major product lines and the impact from
industrywide inventory "destocking" of PTA and PX. Partially
offsetting those factors were increases in sales volumes,
reflecting capacity additions and acquisitions, and investment
incentives.
The decrease in corporate and other operations net expenses to
$213 million in 1996 from $286 million in 1995 resulted from lower
interest expense associated with revised estimates of tax
obligations, and a gain on an asset disposition.
Outlook
The volatility of crude oil, natural gas and refined product
prices, and the overall product supply/demand balance of the
petrochemical industry will continue to affect Amoco's
profitability. While refining margins strengthened during 1997,
over the long term Amoco anticipates refining margins being under
pressure in a very competitive U.S. market. Uncertainty in world
markets, particularly in Asia, new governmental regulation and
technological advances add to the significant challenges that must
be addressed and successfully managed by Amoco.
Amoco believes it has the structure and resources to allow it
to achieve improvements in profitability and growth of its
businesses through intensive portfolio management. Amoco also
expects to continue to benefit from ongoing cost reduction
programs. Efficiency gains are expected through development of new
work processes, alliances, joint ventures, strategic acquisitions
and divestments and increased volume growth in its operations.
Amoco's worldwide barrel-oil-equivalent production is expected
to increase from 1996 levels by 25 percent by the year 2001, with
the largest increases expected to occur in the later years.
Significant contributions are anticipated from the deepwater Gulf
of Mexico, Trinidad, Venezuela, Colombia, Argentina, Bolivia,
Egypt, and the Caspian Basin.
In late 1997, Amoco and Bridas Corporation formed Pan American
Energy LLC ("Pan American"), which created one of the largest
producers of crude oil and natural gas in Argentina. In Bolivia,
Amoco acquired an interest and assumed operatorship of the new
Bolivian company, Empresa Petrolera Chaco S.A. ("Chaco").
Earlier in 1997, Altura Energy Ltd. was established to operate
the combined oil and gas producing properties of Amoco and Shell
Oil Company in west Texas and southeast New Mexico. Amoco has a 64
percent interest in the venture. Amoco also formed a limited
partnership with YPF S.A., called Crescendo Resources L.P., to
manage about one trillion cubic feet of natural gas reserves in the
Texas Panhandle and western Oklahoma.
In petroleum products, a key to Amoco's improved performance
in its refining operations is a new approach and organization that
is enhancing revenues and improving refinery utilization
simultaneously. This has led to aggressive changes in three key
work areas: planning and scheduling, control and optimization, and
asset management. Amoco has already seen benefits during 1997, and
expects further improvements in the future.
Amoco's marketing strategy will continue to emphasize brand
product quality and growth in its position as a convenience
retailer, with the objective of increasing gasoline volumes an
average of four percent per year over the long term. The new
convenience store format, Split Second, has the potential to
increase site profits compared with traditional food shops. Amoco
also has a renewed commitment to the service bay, called Certicare,
which has the potential for growth. Strategic marketing alliances
with such companies as McDonald's Corporation and Fomento Economico
Mexicano S.A. de C.V. in Mexico are expected to continue.
In chemicals, Amoco's overall strategy is to manage its
portfolio to maximize existing business value by stronger
functional excellence, increased market focus and more efficient
management of opportunities. Amoco is in the process of selectively
increasing capacities within its chemical portfolio. While current
industry excess PTA capacity is putting downside pressure on
margins, long-term worldwide annual growth is expected to be eight
percent. PX long-term annual growth is expected to be seven
percent. In order to meet expected growth in PTA and PX, Amoco is
expanding its wholly owned and joint-venture operations. A 500,000
ton PTA unit at the Corporation's plant in Geel, Belgium, is
expected to be completed in 1998, while a new 420,000 ton PX unit
at the same location is scheduled for mechanical completion in late
1999.
In the specialty chemical area, Amoco's dimethyl-2,6-
naphthalene dicarboxylate ("NDC") plant in Decatur, Ala., achieved
full-scale production capacity of 27,000 tons per year in the third
quarter of 1997. Amoco is planning expansion of this facility to
between 40,000 and 50,000 tons by 2000.
Amoco is also expanding its polypropylene capacity, adding a
250,000 ton unit at its existing plant near Alvin, Texas. Alpha-
olefins capacity is being expanded by 100,000 tons at a plant in
Belgium.
Liquidity and Capital Resources
In 1997, cash flow from operating activities totaled $4.6
billion, compared with $4.8 billion in 1996.
Total short- and long-term debt was $5.6 billion at year-end
1997, compared with $5.1 billion at year-end 1996. Debt as a
percent of debt-plus-equity was 25.4 percent at December 31, 1997,
up from 23.6 percent at year-end 1996, reflecting new borrowings
undertaken during the year.
Working capital was $1.0 billion at year-end 1997, compared
with $924 million at year-end 1996. At year-end 1997, the
Corporation's current ratio was 1.17 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 flexibility since the Corporation
has ready access to both short- and long-term debt markets.
Cash dividends paid in 1997 totaled $1.4 billion, or $2.80 per
share, compared to $1.3 billion, or $2.60 per share in 1996. The
quarterly cash dividend was raised to 75 cents per share, effective
with the first-quarter 1998 dividend, an increase of 5 cents per
share, or seven percent. The cash dividend has been raised 20 cents
per share each year from 1994 through 1998, an increase of 36
percent over the period. Amoco also declared a two-for-one split of
each share of common stock outstanding on March 31, 1998.
As of December 31, 1997, Amoco completed $1.2 billion of the
previously announced $2 billion, two-year common stock repurchase
program, representing 13.4 million common shares. Amoco plans to
complete the repurchase program during 1998. Stock repurchased
under the program was in addition to shares purchased for benefit
plan purposes.
The Corporation believes its strong financial position will
permit the financing of its business needs and opportunities as
they arise. 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, 1997, bank lines of
credit available to support commercial paper borrowings were $500
million, all of which were supported by commitment fees.
The Corporation also may use its favorable access to long-term
debt markets to finance profitable growth opportunities. During
1997, Amoco Company issued $300 million of 10-year, 6.5% guaranteed
notes and $200 million of seven-year, 6.25% guaranteed notes. A
$500 million shelf registration for debt securities is on file with
the Securities and Exchange Commission to permit ready access to
capital markets.
With the 21st century approaching, Amoco has been addressing
the issue of adapting its computer systems to process information
in the year 2000 and beyond. As part of the Corporation's renewal
process, Amoco has been implementing new systems and upgrading its
computer technology. In addition, Amoco has reviewed its
information and process control systems, as well as other
electronic control systems, to identify all critical equipment and
software that will need to be altered or replaced to be prepared
for the year 2000. The upgrading of these systems for the year 2000
is under way, and will occur primarily during the three years
ending in December 1999. Incremental costs related to the year 2000
issue, beyond the Corporation's normal level of systems renewal or
spending primarily designed to provide increased functionality
unrelated to the year 2000, are expected to reduce income by about
$55 million before tax in 1998, and by about $100 million over the
three-year period.
Price risk management
Amoco is routinely exposed to hydrocarbon commodity price
risk. It manages a portion of that risk mainly through the use of
futures contracts, swaps and options generally to achieve market
prices on specific purchase and sales transactions. See Notes 1 and
4 to the Consolidated Financial Statements and Supplemental
Information, "Market Risks and Derivative Instruments."
Environmental protection and remediation costs
The Corporation has provided in its accounts for reasonably
estimable future costs of probable environmental remediation
obligations. These amounts relate to various refining and marketing
sites, chemical locations, and crude oil and natural gas
operations, including multi-party sites where 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 remediation 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 22 to the Consolidated Financial
Statements.
The Corporation and its subsidiaries maintain insurance
coverage for environmental pollution resulting from the sudden or
accidental release of pollutants. Various deductibles of up to $50
million per occurrence could apply, depending on the type of
incident involved. Coverage for other types of environmental
obligations is not generally provided, except when required by
regulation or contract. The financial statements do not reflect any
significant anticipated recovery from claims under prior or current
insurance coverage.
At December 31, 1997, the Corporation's reserves for future
environmental remediation costs totaled $510 million, of which $310
million was related to refining and marketing sites. The
Corporation also maintains reserves associated with dismantlement,
restoration and abandonment of crude oil and natural gas
properties, which totaled $666 million at December 31, 1997.
Capital expenditures resulting from existing environmental
regulations, primarily related to refining, marketing and chemicals
sites totaled $89 million in 1997. Excluded from that total were
$292 million for operating costs and amounts spent on research and
development, and $59 million of mandated and voluntary remediation
spending. Amoco's 1998 estimated capital spending for environmental
cleanup and protection projects is expected to be approximately $96
million; spending for remediation in 1998 is expected to
approximate the 1997 level.
Capital and exploration expenditures
Spending in 1997 totaled $3.9 billion, a decrease of 15
percent from the $4.6 billion spent in 1996. The 1997 spending
excludes Amoco's investments in affiliates, including Pan American
and Chaco. Expenditures in 1997 included E&P spending associated
with construction of facilities in Trinidad, Venezuela, Colombia
and the Gulf of Mexico and continuation of programs in Egypt and
the North Sea. Chemical spending in 1997 related to expansions and
construction of new facilities. The 1996 capital expenditures
excluded $535 million for the acquisition of Albemarle
Corporation's alpha-olefins and related businesses.
Capital and exploration expenditures of $4.2 billion have been
approved for 1998. Approximately 60 percent of total E&P spending
of $2.7 billion is planned for locations outside the United States.
Targeted growth areas include the Caspian Basin, Trinidad, Egypt's
Nile Delta, Venezuela, Argentina, Bolivia, West Africa and the
deepwater Gulf of Mexico. Chemicals expenditures in 1998 are
expected to be approximately $750 million for the completion of
expansions currently under way and new facilities in Belgium and
the United States. The capital and exploration expenditures budget
for 1998 excludes any new investments in affiliates, and the
Corporation's share of affiliate spending.
It is anticipated that the 1998 capital and exploration
expenditures budget will be financed primarily by funds generated
internally. The planned expenditure level is subject to adjustment
as dictated by changing economic and political conditions.
Capital and Exploration Expenditures
1997 1996 1995 1994 1993
(millions of dollars)
Exploration and
production
United States ..... $ 876 $1,196 $1,146 $ 829 $ 672
Canada ............ 393 408 384 408 314
Europe ............ 503 558 491 279 493
Other ............. 942 858 654 687 682
Subtotal ........ 2,714 3,020 2,675 2,203 2,161
Petroleum products .... 455 500 500 465 730
Chemicals ............. 652 985 850 467 369
Corporate and other
operations .......... 122 116 111 70 86
Total ........... $3,943 $4,621 $4,136 $3,205 $3,346
Petroleum exploration
expenditures charged to
income (included above)
United States ..... $ 101 $ 142 $ 152 $ 113 $ 90
Canada ............ 69 68 112 117 47
Europe ............ 159 141 123 178 151
Other ............. 270 265 223 225 241
Total ........... $ 599 $ 616 $ 610 $ 633 $ 529
1997 excludes about $200 million of Amoco's share of affiliates'
spending.
1993 through 1996 restated; see "Industry Segments."
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995.
Statements in this report that are not historical facts,
including statements in Management's Discussion and Analysis under
the heading "Outlook" and other statements about industry and
company growth, estimates of expenditures and savings, and other
trend projections are forward looking statements. These statements
are based on current expectations and involve risk and
uncertainties. Actual future results or trends may differ
materially depending on a variety of factors. These include
specific factors identified in the discussion accompanying such
forward looking statements, industry product supply, demand and
pricing, political stability and economic growth in relevant areas
of the world, the Corporation's successful execution of its
internal performance plans, development and use of new technology,
successful partnering, actions of competitors, natural disasters,
and other changes to business conditions.
Item 8. Financial Statements and Supplemental Information
Index to Financial Statements and Supplemental Information Page
Report of Independent Accountants ....................... 41
Consolidated Financial Statements:
Consolidated Statement of Income ...................... 42
Consolidated Statement of Financial Position .......... 43
Consolidated Statement of Shareholders' Equity......... 44
Consolidated Statement of Cash Flows .................. 45
Notes to Consolidated Financial Statements ............ 46
Financial Statement Schedule:
Valuation and Qualifying Accounts (Schedule II) ..... 99
Supplemental Information:
Oil and Gas Exploration and Production Activities ..... 77
Quarterly Results and Stock Market Data ............... 88
Market Risks and Derivative Instruments ............... 89
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.
REPORT OF INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
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, 1997 and 1996, and the results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1997, 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.
As discussed in Note 2 to the financial statements, Amoco
Corporation changed its method of accounting for the impairment of
long-lived assets in 1995 to comply with the provisions of
Statement of Financial Accounting Standards No. 121.
PRICE WATERHOUSE LLP
Chicago, Illinois
February 24, 1998
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31
1997 1996 1995
(millions of dollars,
except as noted)
Revenues:
Sales and other operating revenues .... $31,910 $32,150 $27,066
Consumer excise taxes ................. 3,451 3,386 3,339
Equity income in affiliates and
other income ........................ 926 576 599
Total revenues ...................... 36,287 36,112 31,004
Costs and expenses:
Purchased crude oil, natural gas,
petroleum products and merchandise .. 17,735 17,942 14,140
Operating expenses .................... 5,009 4,642 4,555
Petroleum exploration expenses,
including exploratory dry holes ..... 599 616 610
Selling and administrative expenses ... 2,172 2,246 2,124
Taxes other than income taxes ......... 4,222 4,215 4,042
Depreciation, depletion, amortization,
and retirements and abandonments .... 2,373 2,294 2,794
Interest expense ...................... 401 192 335
Total costs and expenses ............ 32,511 32,147 28,600
Income before income taxes ............ 3,776 3,965 2,404
Income taxes .......................... 1,056 1,131 542
Net income ............................ $ 2,720 $ 2,834 $ 1,862
Net income per share
Basic ............................... $ 5.55 $ 5.69 $ 3.76
Assuming dilution ................... $ 5.52 $ 5.67 $ 3.75
Average common shares outstanding
(millions)
Basic ............................... 490 497 495
Assuming dilution ................... 493 499 497
After stock split (Unaudited)
Net income per share
Basic ............................... $ 2.77 $ 2.84 $ 1.88
Assuming dilution ................... $ 2.76 $ 2.83 $ 1.87
Average common shares outstanding
(millions)
Basic ............................... 980 994 $ 991
Assuming dilution ................... 986 998 994
(The accompanying notes are an integral part of these statements.)
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
December 31
1997 1996
ASSETS (millions of dollars)
Current Assets:
Cash ............................................ $ 166 $ 186
Marketable securities--at cost (all corporate,
except $104 on December 31, 1997, and $141 on
December 31, 1996, which represent state and
municipal securities) ......................... 979 1,135
Accounts and notes receivable (less allowances
of $10 on December 31, 1997, and $17 on
December 31, 1996) ............................ 3,585 3,942
Inventories ..................................... 1,174 1,069
Prepaid expenses, and income taxes and other .... 1,140 731
7,044 7,063
Investments and other assets:
Investments and related advances .............. 2,099 796
Long-term receivables and other assets ........ 803 841
2,902 1,637
Properties--at cost, less accumulated
depreciation, depletion and amortization of
$26,814 on December 31, 1997, and $27,111 on
December 31, 1996 ............................. 22,543 23,400
$32,489 $32,100
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations......... $ 218 $ 151
Short-term obligations .......................... 751 821
Accounts payable ................................ 3,026 3,196
Accrued liabilities ............................. 785 908
Taxes payable (including income taxes) .......... 1,264 1,063
6,044 6,139
Long-term obligations:
Debt ............................................ 4,639 4,153
Capitalized leases .............................. 80 76
4,719 4,229
Deferred credits and other non-current liabilities:
Income taxes .................................... 2,868 2,850
Other ........................................... 2,408 2,345
5,276 5,195
Minority interest ................................. 131 129
Shareholders' equity:
Common stock (authorized 800,000,000 shares;
issued and outstanding as of December 31, 1997-
483,023,808 shares; December 31, 1996--
497,275,364 shares) ........................... 2,568 2,646
Earnings retained and invested in the business .. 13,900 13,806
Pension liability adjustment .................... (31) (25)
Foreign currency translation adjustment ......... (118) (19)
Total shareholders' equity .................... 16,319 16,408
$32,489 $32,100
(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.)
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Earnings
Retained
and
Invested Other
Common in the Equity
Stock Business Adjustments Total
(millions of dollars, except as noted)
Balance on December 31, 1994 $2,166 $12,223 $ (7) $14,382
Net income ............... 1,862 1,862
Cash dividends of $2.40
per share .............. (1,197) (1,197)
Foreign currency
translation adjustment . 19 19
Pension liability
adjustment.............. (49) (49)
Issuances of common stock
(net) .................. 424 (593) (169)
Balance on December 31, 1995 2,590 12,295 (37) 14,848
Net income ............... 2,834 2,834
Cash dividends of $2.60
per share .............. (1,287) (1,287)
Foreign currency
translation adjustment . (31) (31)
Pension liability
adjustment ............. 24 24
Issuances of common stock
(net) .................. 56 (36) 20
Balance on December 31, 1996 2,646 13,806 (44) 16,408
Net income ............... 2,720 2,720
Cash dividends of $2.80
per share .............. (1,382) (1,382)
Foreign currency
translation adjustment . (99) (99)
Pension liability
adjustment ............. (6) (6)
Acquisitions of common
stock(net) ............. (78) (1,244) (1,322)
Balance on December 31, 1997 $2,568 $13,900 $(149) $16,319
(The accompanying notes are an integral part of these statements.)
AMOCO CORPORATION AND SUBSIDIARIES
__________________________
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31
1997 1996 1995
(millions of dollars)
Cash flows from operating activities:
Net income ......................... $ 2,720 $ 2,834 $ 1,862
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion,
amortization, and retirements
and abandonments ............... 2,373 2,294 2,794
Decrease (increase)in receivables 269 (661) (33)
(Increase)decrease in inventories (117) 4 1
(Decrease)increase in payables and
accrued liabilities ............ (63) 608 31
Gain on sale of assets ........... (645) (220) (221)
Deferred taxes and other items ... 108 (71) (625)
Net cash provided by operating
activities ..................... 4,645 4,788 3,809
Cash flows from investing activities:
Capital expenditures ............. (3,344) (3,910) (3,526)
Proceeds from dispositions of
property and other assets ...... 1,617 475 290
New investments, advances and
business acquisitions .......... (1,154) (721) (173)
Proceeds from sales of investments 21 521 20
Other ............................ 59 20 81
Net cash used in investing
activities ..................... (2,801) (3,615) (3,308)
Cash flows from financing activities:
New long-term obligations ........ 1,028 362 661
Repayment of long-term obligations (274) (427) (309)
Cash dividends paid .............. (1,382) (1,287) (1,197)
Issuances of common stock ........ 100 59 42
Acquisitions of common stock ..... (1,422) (39) (704)
Issuance of minority interest
preferred stock ................ -- -- 100
(Decrease) increase in short-term
obligations .................... (70) 86 511
Net cash used in financing
activities ..................... (2,020) (1,246) (896)
Decrease in cash and marketable
securities ....................... (176) (73) (395)
Cash and marketable securities-
beginning of year .................. 1,321 1,394 1,789
Cash and marketable securities-
end of year ........................ $ 1,145 $ 1,321 $ 1,394
(The accompanying notes are an integral part of these statements.)
AMOCO CORPORATION AND SUBSIDIARIES
__________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
Principles of consolidation. The assets, liabilities and
results of operations of subsidiaries in which the Corporation has
a controlling interest are included in the Consolidated Financial
Statements. The Corporation also consolidates its proportionate
share of the accounts of undivided interest pipelines and certain
oil and gas joint ventures. Investments in companies in which less
than a controlling interest is held are generally accounted for by
the equity method.
Estimates in financial statements. The preparation of
financial statements in conformity with generally accepted
accounting principles requires estimates and assumptions that
affect certain reported amounts. Actual results may differ in some
cases from the estimates.
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 that benefit production over multiple years 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, which for refining and chemical
facilities average 20 years, for administrative buildings average
45 years and for service stations average 16 years. 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.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The portion of costs of unproved oil and gas properties
estimated to be non-productive is amortized over projected holding
periods.
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.
Long-lived assets with recorded values that are not expected
to be recovered through future cash flows are written down to
current fair value. Fair value is generally determined from
estimated discounted future net cash flows.
Significant gains or losses from retirements or disposition of
facilities 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 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 and commitments denominated
in foreign currencies. Hedge accounting is applied to derivative
contracts that reduce the Corporation's exposure to price
fluctuations or that are entered into in conjunction with specific
fixed price natural gas sales contracts. Gains, losses and cash
flows from hedges 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 certain 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. Probable recoveries from third parties are
recorded as receivables.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Net income per share. Basic net income per share of common
stock is based on the monthly weighted average number of shares
outstanding during the year. Diluted net income per share reflects
the potential dilution from the exercise of stock options.
Securities that could potentially dilute basic net income per share
in the future are immaterial.
Note 2. Acquisitions, Dispositions and Special Items
In 1997, proceeds from dispositions included approximately
$1.2 billion from the sale of U.S. non-core oil and gas properties
and an intrastate natural gas pipeline unit in Texas. These sales
were part of the Corporation's strategy to upgrade and refocus the
U.S. portfolio of E&P assets. Other income included related gains
on property dispositions, which increased after-tax earnings by
$377 million. Other current assets include properties held for sale
with a net book value of $312 million.
In 1997, new investments included approximately $865 million
in cash for interests in Pan American Energy LLC in Argentina and
Empresa Petrolera Chaco in Bolivia.
Depreciation, depletion, amortization, and retirements and
abandonments for 1997 included charges of $133 million ($106
million after tax), primarily related to the anticipated sale or
other disposition of certain non-core chemical operations. During
1997 these assets generated net income of $9 million on a carrying
value of $339 million, before the impairment charge.
In 1996, the Corporation acquired the alpha-olefins and
related businesses of Albemarle Corporation for $535 million. Other
income in 1996 included gains on the sale of Amoco's polystyrene
foam products business ($97 million after tax) and on certain
Canadian asset dispositions ($56 million after tax).
In 1995, the Corporation adopted SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." Depreciation, depletion, amortization, and
retirements and abandonments for 1995 included $602 million ($380
million after tax) for the impairment of long-lived assets. The
charge was primarily related to oil and gas producing properties in
North America (about $300 million after tax), which were acquired
or developed during periods of higher prices, and
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
certain unprofitable specialty polymer production facilities ($42
million after tax). Other income in 1995 included a gain of $132
million ($83 million after tax) related to the sale of Amoco Motor
Club.
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:
1997 1996 1995
(millions of dollars)
Interest paid ......... $362 $343 $327
Income taxes paid ..... $913 $951 $706
Excluded from the Consolidated Statement of Cash Flows for
1997 were the following effects of non-cash investing and financing
activities related to investments in Argentina and Bolivia:
(millions of dollars)
Non-cash assets and liabilities contributed:
-- Properties .............................. $ 400
-- Working capital and other assets ........ 42
442
-- Long-term debt and liabilities .......... 208
Net assets contributed ....................... 234
Cash portion of new investments .............. 865
New investments .............................. $1,099
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 4. Financial Instruments and Hedging Activities
In the normal course of business, Amoco holds or issues
various financial instruments which expose the Corporation to
financial risk associated with market interest rates, currency
exchange rates and credit worthiness. Also, Amoco's petroleum and
chemical businesses are affected by commodity price movements. To
manage a portion of these inherent risks, Amoco purchases and sells
various derivative financial instruments and commodity futures
contracts. Substantially all financial instruments held by the
Corporation are for purposes other than trading.
Fair values. The carrying values of most financial instruments
are based on historical costs. The carrying values of receivables,
payables, marketable securities and short-term obligations
approximate their fair value. The estimated fair value of long-term
debt outstanding as of December 31, 1997 and 1996 was $4,909
million and $4,301 million, respectively. The estimated fair values
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.
Credit risks. A significant portion of Amoco's receivables is
from other oil and gas and chemical companies. Although collection
of these receivables could be influenced by economic factors
affecting these industries and the countries in which Amoco and its
customers operate, the risk of significant loss is considered
remote. Substantially all derivatives are either exchange traded or
with major financial institutions, and the risk of credit loss is
considered remote.
Currency risks. 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
and contractual commitments. The following table shows the amount
of debt, including current portions, denominated in foreign
currencies as of December 31, 1997 and 1996, and the face amounts
of foreign currency forward contracts that have been designated as
hedges:
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1997 1996
Debt Hedge* Debt Hedge*
(millions of U.S. dollars)
British pound sterling $ 624 $ 935 $ 652 $ 954
Canadian dollar ...... $ 216 $ 224 $ 276 $ 281
* Includes tax effects.
The hedge contracts generally have maturities that match the
risks being hedged. The carrying value and fair value of the
forward contracts were not material at December 31, 1997 and 1996.
Commodity price risks. The Corporation enters into futures,
swaps and option contracts to manage a portion of its exposure to
price fluctuations on hydrocarbon transactions. Natural gas
futures, swaps and options are used to convert specific sales and
purchase contracts from fixed prices to market prices. Swaps also
are used to hedge exposure for price differences between locations.
Futures contracts are used to convert specific gasoline and
distillate contracts from fixed to market prices.
Natural gas swap contracts outstanding under these programs at
December 31, 1997 and 1996 totaled 368 trillion British thermal
units ("Btus") and 334 trillion Btus, respectively. Most contracts
are for a remaining term of less than one year, while contracts
representing 29 trillion Btus of natural gas have terms that extend
from one to three 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 1997,
was $20 million for contracts with favorable positions, and $20
million for contracts with unfavorable positions. The comparable
amounts for 1996 were $28 million for contracts with favorable
positions and $19 million for contracts with unfavorable positions.
At December 31, 1997, the Corporation also had fixed the sales
price or a range of prices of 4 million barrels of crude oil and 6
trillion Btus of natural gas production for periods of less than
one year using forward swaps. There were no significant unrealized
gains or losses on these contracts at December 31, 1997.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Commitments and guarantees. At December 31, 1997, the
remaining minimum payments required under certain contracts for the
purchase of transportation capacity, materials and services over
terms of up to 20 years totaled $328 million. Contingent
liabilities of the Corporation included guarantees of $312 million
of outstanding loans of equity affiliates as described in Note 6,
and guarantees of $37 million on outstanding loans of others.
Note 5. Inventories
Inventories at December 31, 1997 and 1996, are shown in the
following table:
December 31
1997 1996
(millions of dollars)
Crude oil and petroleum products ....... $ 407 $ 315
Chemical products ...................... 485 465
Other products and merchandise ......... 22 15
Materials and supplies ................. 260 274
Total ............................. $ 1,174 $ 1,069
During the year ended December 31, 1996, 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 $90 million.
Inventories carried under the LIFO method represented
approximately 55 percent of total year-end inventory carrying
values in 1997 and 48 percent in 1996. It is estimated that
inventories would have been approximately $800 million and $1,400
million higher than reported on December 31, 1997 and 1996,
respectively, if the quantities valued on the LIFO basis were
instead valued at current prices.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 6. Equity Investments
Amoco conducts portions of its business through investments in
companies accounted for using the equity method. The equity
affiliates are primarily engaged in exploration and production in
the recently established ventures in Argentina and Bolivia,
transportation of crude oil and petroleum products in the United
States and chemical operations in Asia. Following is summarized
financial information for Amoco's equity affiliates combined, as
well as Amoco's proportionate interest in the affiliates:
1997 1996 1995
Amoco Amoco Amoco
Total Share Total Share Total Share
(millions of dollars)
Current assets .... $1,319 $ 536 $ 856 $ 310 $1,002 $ 380
Other assets ...... 8,348 3,455 4,032 1,363 3,905 1,080
Current liabilities 1,154 454 783 246 940 311
Other liabilities . 3,725 1,518 2,291 685 2,275 545
Net assets ........ $4,788 $2,019 $1,814 $ 742 $1,692 $ 604
Total revenues .... $2,754 $ 989 $2,658 $ 950 $2,973 $1,110
Income before
income taxes ..... $ 378 $ 79 $ 512 $ 130 $ 712 $ 232
Net income ........ $ 152 $ 24 $ 463 $ 144 $ 491 $ 170
Dividends received from these investments amounted to $70
million in 1997, $136 million in 1996 and $101 million in 1995.
Amoco's share of undistributed earnings of the equity affiliates
totaled $208 million at December 31, 1997.
Accounts and notes receivable in the Consolidated Statement of
Financial Position included $44 million and $26 million at December
31, 1997 and 1996, respectively, of amounts due from affiliated
companies. Accounts payable included $6 million and $4 million at
December 31, 1997 and 1996, respectively, of amounts due to
affiliated companies.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 7. Property, Plant and Equipment
Investment in properties at December 31, 1997 and 1996,
detailed by industry segment, was as follows:
1997 1996
Gross Net Net
(millions of dollars)
Exploration and production:
United States ........... $14,872 $ 6,328 $ 7,032
Non-U.S. ................ 14,487 5,426 5,464
Petroleum products ........ 10,656 5,418 5,564
Chemicals ................. 7,801 4,554 4,477
Corporate and other
operations .............. 1,541 817 863
$49,357 $22,543 $23,400
Note 8. Short-Term Obligations
Amoco's short-term obligations consist of notes payable and
commercial paper. Notes payable as of December 31, 1997, totaled
$53 million at an average annual interest rate of 5.7 percent,
compared with $80 million at an average annual interest rate of 6.2
percent at year-end 1996. Commercial paper borrowings at
December 31, 1997, were $698 million at an average annual interest
rate of 5.6 percent compared with $741 million at an average annual
interest rate of 5.4 percent as of December 31, 1996. Bank lines of
credit available to support commercial paper borrowings of the
Corporation amounted to $500 million at December 31, 1997, and
December 31, 1996. All of these were supported by commitment fees.
Note 9. Accounts Payable
Accounts payable at December 31, 1997 and 1996, included
liabilities in the amount of $418 million and $390 million,
respectively, for checks issued in excess of related bank balances
but not yet presented for collection.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 10. Long-Term Debt
Amoco's long-term debt resides principally with two Amoco
subsidiaries--Amoco Company and Amoco Canada Petroleum Company Ltd.
("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.
The components of long-term debt and year-end interest rates
are summarized as follows:
1997 1996
(millions of
dollars)
Amoco Company and subsidiaries
6.25% Notes due 2004 .............. $ 200 $ --
6.5% Notes due 2007 ............... 300 --
Environmental and other industrial
development obligations ......... 916 880
6.4% Pound Sterling loans* ........ 624 652
6.1% Bank loan due 2002* .......... 300 170
6.2% Bank loan due 2005* .......... 198 177
Other indebtedness ................ 388 366
Subtotal ........................ 2,926 2,245
Less current maturities ........... 135 55
Total Amoco Company ............. 2,791 2,190
Amoco Canada
6 3/4% Debentures due 2005 ........ 299 299
7 1/4% Notes due 2002 ............. 299 299
6 3/4% Debentures due 2023 ........ 297 297
7.95% Debentures due 2022 ......... 297 296
7 1/4% Notes due 2002 ............. 252 253
8.98% Bonds due 2005 .............. 219 222
Other ............................. 41 40
Total Amoco Canada .............. 1,704 1,706
Other subsidiaries (less current
maturities) ....................... 144 257
Total long-term debt ............ $4,639 $4,153
*Weighted average interest rate at December 31, 1997.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amoco Corporation guarantees the outstanding public debt of
Amoco Company. Amoco Corporation and Amoco Company guarantee the
notes, bonds and debentures of Amoco Canada.
Annual maturities of total long-term debt during the next five
years, including the portion classified as current, are $207
million in 1998, $220 million in 1999, $274 million in 2000, $344
million in 2001 and $874 million in 2002.
Note 11. Capital Stock
There were 800,000,000 shares of common stock without par
value authorized at December 31, 1997. Details concerning share
transactions are shown below:
1997 1996
Shares Amount Shares Amount
(thous) (mil) (thous) (mil)
Outstanding on Jan. 1 ..... 497,275 $2,646 496,403 $2,590
Stock repurchases ......... (16,167) (178) (457) (2)
Sales and distributions
under employee benefit
plans, etc. ............. 1,916 100 1,329 58
Canadian SEDs conversion .. -- -- -- --
Shares outstanding on
Dec. 31 ................. 483,024 $2,568 497,275 $2,646
1995
Shares Amount
(thous) (mil)
Outstanding on Jan. 1 ..... 496,393 $2,166
Stock repurchases ......... (10,604) (110)
Sales and distributions
under employee benefit
plans, etc. ............. 1,971 92
Canadian SEDs conversion .. 8,643 442
Shares outstanding on
Dec. 31 ................. 496,403 $2,590
On January 27, 1998, the Board of Directors approved an
irrevocable two-for-one common stock split. Each share outstanding
on March 31, 1998, will be split into two shares.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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, 1997, none of the preferred stock
had been issued.
Note 12. Leases
The Corporation leases various types of properties, including
service stations, tankers, buildings, railcars and other
facilities, some of which are subleased to others. Some of the
leases and subleases provide for contingent rentals based on
refined product throughput.
Summarized below as of December 31, 1997, are future minimum
rentals payable and related sublease rental income for non-
cancelable capital and operating leases:
Capital Leases Operating Leases
Rentals Rentals Rental
Payable Payable Income
(millions of dollars)
1998 ........................... $ 16 $ 207 $ 42
1999 ........................... 14 180 5
2000 ........................... 12 148 2
2001 ........................... 10 112 1
2002 ........................... 10 108 1
After 2003 ..................... 82 444 9
Total minimum rentals ........ 144 $ 1,199 $ 60
Less--Amounts
representing interest ...... 53
Capitalized lease obligations
(including $11 million
payable within one year) .... $ 91
Rental expense and related rental income applicable to
operating leases for the three years ended December 31, 1997, are
summarized below:
1997 1996 1995
(millions of dollars)
Minimum rental expense ....... $ 297 $ 295 $ 269
Contingent rental expense .... 8 42 25
Total .................... 305 337 294
Less--Related rental income .. 47 55 63
Net rental expense ....... $ 258 $ 282 $ 231
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 13. Foreign Currency
A foreign currency loss of $36 million was reflected in income
in 1997, compared with a loss of $17 million in 1996 and a gain of
$1 million in 1995. In addition, net translation losses of $99
million and $31 million for 1997 and 1996, respectively, and a net
translation gain of $19 million for 1995 were reflected in the
foreign currency translation adjustment account in shareholders'
equity.
Note 14. 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:
1997 1996 1995
(millions of dollars)
Short-term obligations ...... $ 56 $ 47 $ 16
Long-term obligations ....... 307 270 301
Total external financing .. 363 317 317
Other interest expense ...... 62 (103) 30
425 214 347
Less--Capitalized interest .. 24 22 12
Net interest expense ...... $ 401 $ 192 $ 335
Note 15. Research and Development Expenses
Research and development costs are expensed as incurred and
amounted to $151 million in 1997, $171 million in 1996 and $175
million in 1995.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 16. Taxes
The provision for income taxes is composed of:
1997 1996 1995
(millions of dollars)
Federal--current ........ $ 546 $ 513 $ 283
--deferred ....... (50) 57 (63)
Foreign--current ........ 518 561 520
--deferred ....... 2 (35) (232)
State and local ......... 40 35 34
$1,056 $1,131 $ 542
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:
1997 1996
Percent Percent
of of
Amount Pre-Tax Amount Pre-Tax
(millions) Income (millions) Income
Pre-tax income:
U.S. source ...... $ 2,504 $ 2,453
Foreign source ... 1,272 1,512
$ 3,776 $ 3,965
Theoretical U.S.
income tax ....... $ 1,321 35.0 $ 1,388 35.0
Increase (reduction)
due to:
Foreign taxes at
rates different
than the U.S. rate 145 3.8 3 .1
Tax credits ........ (166) (4.4) (176) (4.4)
Tax-rate changes ... 15 .4 -- --
Carryforward
utilization and
prior-year adj. .. (206) (5.4) (46) (1.2)
All other (net) .... (53) (1.4) (38) (1.0)
$ 1,056 28.0 $ 1,131 28.5
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
1995
Percent
of
Amount Pre-Tax
(millions) Income
Pre-tax income:
U.S. source .............................. $ 1,556
Foreign source ........................... 848
$ 2,404
Theoretical U.S. income tax ................ $ 842 35.0
Increase (reduction) due to:
Foreign taxes at rates different
than the U.S. rate........................ 39 1.6
Tax credits ................................ (173) (7.2)
Tax-rate changes ........................... (16) (.7)
Carryforward utilization and prior-year adj. (63) (2.6)
All other (net) ............................ (87) (3.6)
$ 542 22.5
The aggregate federal and foreign deferred income tax balance
represents the tax effect of the following items at December 31:
1997 1996
(millions of dollars)
Tax credit and loss carryforwards ..... $1,808 $1,450
Exploration costs ..................... 306 339
Postretirement benefits ............... 541 537
Environmental costs ................... 229 273
Other ................................. 323 394
Gross deferred tax assets ............. 3,207 2,993
Deferred tax asset valuation allowance (886) (569)
Net deferred tax assets ............. $2,321 $2,424
Accelerated depreciation .............. $3,307 $3,625
Intangible drilling costs ............. 754 736
Other ................................. 345 249
Deferred tax liabilities ............ $4,406 $4,610
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Taxes other than income taxes include:
1997 1996 1995
(millions of dollars)
Consumer excise taxes ........... $3,451 $3,386 $3,339
Production and severance taxes
United States ................. 127 140 100
Foreign ....................... 159 187 113
Property taxes .................. 281 290 254
Social Security, corporation and
other taxes ................... 204 212 236
$4,222 $4,215 $4,042
Undistributed earnings of certain foreign subsidiaries and
joint-venture companies aggregated $549 million on December 31,
1997, 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 17. 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 for up to 31 million shares of common stock. Such options
may be incentive stock options to the extent provided in the
Internal Revenue Code. No options may be granted under the current
plan after December 31, 2001. The grant price of each option equals
the fair market value of the Corporation's stock on the date of
grant. Options granted under the plans normally extend for 10 years
and generally become exercisable one or two years after the date of
the grant. Options with SARs permit the holder 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. Such payments can be
made in shares, cash or a combination at the discretion of the
administering committee. No options were granted with SARs in 1997.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amoco applies APB Option 25 to account for its stock options.
Accordingly, no compensation costs have been recognized for its
plans. Had compensation costs been determined based on the fair
value at the grant dates for awards under the plans consistent with
the method recommended by SFAS 123 "Accounting for Stock-Based
Compensation," the Corporation's pro forma net income and basic net
income per share would have been $2,690 million or $5.49 per share
for 1997, $2,813 million or $5.66 per share for 1996 and $1,853
million or $3.74 per share for 1995.
The grant-date fair values of options granted during 1997,
1996 and 1995 were $16.82, $13.55 and $13.06, respectively. The
fair value of each option was estimated on the date of grant using
the Black-Scholes option-pricing model with the following
assumptions: risk-free interest rates of 6.7 percent for 1997, 6.1
percent for 1996 and 7.0 percent for 1995; expected volatility of
17.2 percent for 1997, 18.9 percent for 1996 and 19.8 percent for
1995; expected life of six years and dividend yield of 4 percent
for all years.
Option plan transactions in 1997, 1996 and 1995 are summarized
in the following table:
1997 1996 1995
Aver- Aver- Aver-
age age age
Exer- Exer- Exer-
Shares cise Shares cise Shares cise
(000) Price (000) Price (000) Price
Outstanding at
Jan. 1 ....... 13,933 $57.06 12,666 $52.50 11,595 $49.91
Granted .... 3,399 $89.79 2,792 $73.21 2,282 $62.69
Exercised .. (1,788) $50.41 (1,218) $47.69 (921) $45.70
Surrendered
or
terminated . (185) $77.46 (186) $64.75 (214) $56.80
Canceled upon
exercise of
SARs ....... (40) $39.09 (121) $35.58 (76) $33.88
Outstanding at
Dec. 31 ...... 15,319 $65.00 13,933 $57.06 12,666 $52.50
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Options exercisable at December 31, 1997, 1996 and 1995 were
10,719,431; 10,153,687; and 9,440,725; respectively. Of the total
options outstanding on December 31, 1997, 108,500 were with SARs.
The following table summarizes information about the options
outstanding at December 31, 1997:
Outstanding Exercisable
Average
Remaining Average Average
Range of Shares Contractual Exercise Shares Exercise
Exercise Prices (000) Life (years) Price (000) Price
$ 37 - 54 3,011 2.7 $ 46 3,011 $ 46
$ 54 - 58 4,501 5.0 $ 56 4,501 $ 56
$ 59 - 75 4,459 7.8 $ 69 3,207 $ 67
$ 82 - 97 3,348 9.2 $ 90 -- $ --
The Corporation's restricted stock grant plans provide for the
awarding of shares of Corporation common stock up to 6 million
shares to selected employees and outside 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 1997,
112,795 shares were issued under the current plans. No restricted
shares may be issued under the current employee plan after December
31, 2001.
Note 18. Management Incentive Programs
Management incentive compensation plans approved by
shareholders provide for the granting of awards to key managerial
employees and executives of the Corporation and certain
subsidiaries. Amounts charged against earnings in anticipation of
awards to be made later were $19 million in 1997, $21 million in
1996 and $16 million in 1995. Awards made in 1997, 1996 and 1995
amounted to $20 million, $18 million and $20 million, respectively.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 19. 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.
The funded status of the plans as of December 31 for 1997 and
1996 was as follows:
Plans for which
Assets Benefits
Exceed Exceed
Benefits Assets
(millions of dollars)
1997
Fair value of plan assets, principally
equity and fixed-income securities . $ 3,393 $ --
Actuarial present value of benefit
obligations:
Accumulated benefit obligation* .... 3,074 123
Additional benefits based on
estimated future salary levels ... 452 12
Projected benefit obligation ("PBO") 3,526 135
Plan assets under PBO ................ (133) (135)
Unrecognized net (gains) losses
at transition ...................... (38) 8
Other unrecognized net losses ........ 197 57
Unrecognized prior service cost ...... (54) (14)
Minimum pension liability adjustment . -- (48)
Net pension cost accrued ............. $ (28) $ (132)
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Plans for which
Assets Benefits
Exceed Exceed
Benefits Assets
(millions of dollars)
1996
Fair value of plan assets, principally
equity and fixed-income securities . $ 2,910 $ --
Actuarial present value of benefit
obligations:
Accumulated benefit obligation* .... 2,785 125
Additional benefits based on
estimated future salary levels ... 517 31
Projected benefit obligation ("PBO") 3,302 156
Plan assets under PBO ................ (392) (156)
Unrecognized net (gains) losses at
transition ......................... (47) 18
Other unrecognized net losses ........ 396 59
Unrecognized prior service cost ...... 61 (19)
Minimum pension liability adjustment . -- (39)
Net pension cost prepaid (accrued) ... $ 18 $ (137)
* Accumulated benefits totaling $150 million and $311
million were non-vested at December 31, 1997 and 1996,
respectively.
The actuarial assumptions used for the Corporation's principal
pension plans for 1997 and 1996 were as follows:
1997 1996
Discount rate for service and interest cost .. 7.0% 7.0%
Discount rate for the projected benefit
obligation ................................. 7.0% 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%
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The components of net pension cost for the past three years
were as follows:
1997 1996 1995
(millions of dollars)
Service cost--benefits earned
during the period ........... $ 131 $ 121 $ 98
Interest cost on projected
benefit obligation .......... 244 236 242
Actual gain on assets ......... (681) (446) (492)
Unrecognized gain ............. 409 186 217
Recognized gain on assets ..... (272) (260) (275)
Settlement/curtailment loss ... 9 4 2
Amortization of unrecognized
amounts ..................... 27 29 12
Net pension cost .............. $ 139 $ 130 $ 79
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 $78 million in 1997, $80 million in 1996 and $83
million in 1995.
Note 20. 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. The cost of such benefits is recognized
during employees' years of active service.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The status of the Corporation's unfunded plans as of December
31 for 1997 and 1996 was as follows:
1997 1996
(millions of dollars)
Accumulated benefit obligation
Retirees .............................. $ 638 $ 642
Fully eligible active plan participants 236 216
Other active plan participants ........ 260 281
Total ................................. 1,134 1,139
Unrecognized net gains .................. 258 213
Unrecognized prior service gains ........ 170 191
Accrued postretirement benefit cost ..... $ 1,562 $ 1,543
The actuarial assumptions used for the Corporation's principal
postretirement benefit plans for 1997 and 1996 were as follows:
1997 1996
Discount rate for service and interest cost ........ 7.0% 7.0%
Discount rate for the accumulated benefit obligation 7.0% 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 .............................. 8.5% 9.4%
--Medicare eligible retirees ..................... 7.0% 7.5%
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 .... $ 14 $ 15
--accumulated postretirement benefit obligation .. $ 112 $ 120
The components of net postretirement benefit costs for the
past three years were as follows:
1997 1996 1995
(millions of dollars)
Service cost--benefits earned
during the period ............ $ 27 $ 30 $ 26
Interest cost on accumulated
benefit obligation ........... 78 81 86
Amortization and other ......... (33) (39) (36)
Net postretirement benefit cost $ 72 $ 72 $ 76
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 21. 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 1992. 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 filed a petition in the U.S. Tax Court contesting the
IRS statutory Notice of Deficiency. Trial on the matter was held in
April 1995, and a decision was rendered by the U.S. Tax Court in
March 1996, in Amoco's favor. The IRS has appealed the Tax Court's
decision to the U.S. Court of Appeals for the Seventh Circuit. A
comparable adjustment of foreign tax credits for each year has been
proposed for the years 1983 through 1992 based upon subsequent IRS
audits. The Corporation believes that the foreign income taxes have
been reflected properly in its U.S. federal tax returns.
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 22. 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 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 in
relationship to the results of operations in any one period, they
are not expected to have a material effect on Amoco's liquidity or
consolidated financial position.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 23. Summarized Financial Data
The Corporation's principal subsidiary, Amoco Company, is the
holding company for substantially all petroleum and chemical
operating subsidiaries except Amoco Canada and selected other
activities. Amoco guarantees the outstanding public debt
obligations of Amoco Company.
Summarized financial data for Amoco Company are presented as
follows:
1997 1996 1995
(millions of dollars)
For the years ended December 31:
Revenues (including excise
taxes) ..................... $32,986 $32,629 $28,339
Operating profit ............. $ 3,820 $ 3,735 $ 2,783
Net income ................... $ 2,274 $ 2,402 $ 1,798
At December 31:
Current assets ............... $ 6,442 $ 6,361 $ 5,303
Total assets ................. $30,062 $29,208 $26,326
Current liabilities .......... $ 5,165 $ 4,926 $ 4,578
Long-term debt - affiliates .. $ 4,739 $ 4,731 $ 4,608
- other ....... $ 2,791 $ 2,190 $ 2,177
Deferred credits ............. $ 4,663 $ 4,524 $ 4,397
Minority interest ............ $ 119 $ 131 $ 110
Shareholder's equity ......... $12,505 $12,630 $10,456
Annual maturities of long-term debt during the next five years,
including the portion classified as current, are $135 million in
1998, $174 million in 1999, $215 million in 2000, $304 million in
2001 and $323 million in 2002.
Amoco Canada is a wholly owned subsidiary of Amoco
Corporation. Amoco and Amoco Company guarantee the notes, bonds and
debentures of Amoco Canada.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Summarized financial data for Amoco Canada are presented as
follows:
1997 1996 1995
(millions of dollars)
For the years ended December 31:
Revenues ..................... $ 4,705 $ 4,598 $ 3,619
Net income (loss) ............ $ 301 $ 307 $ (205)
At December 31:
Current assets ............... $ 1,479 $ 1,615 $ 1,252
Total assets ................. $ 4,217 $ 4,412 $ 4,493
Current liabilities .......... $ 948 $ 1,110 $ 2,494
Non-current liabilities ...... $ 3,043 $ 3,377 $ 2,381
Shareholder's equity (deficit) $ 226 $ (75) $ (382)
$552 million of long-term debt is scheduled to mature in 2002.
Note 24. Geographic and Segment Data
The Corporation operates worldwide in the petroleum and
chemical industries, in several industry segments. Petroleum
operations include E&P and petroleum products segments. The E&P
segment is engaged in exploring for, developing and producing crude
oil and natural gas; extraction of natural gas liquids ("NGL"); and
marketing of natural gas. The petroleum products segment is
responsible for petroleum refining operations, marketing of all
petroleum products, the transportation of crude oil and petroleum
products, associated supply and trading activities, primarily in
the United States, and transportation and wholesale marketing of
Canadian crude oil, sulfur and NGL. The chemical segment
manufactures and sells various petroleum-based chemical products.
Corporate and other operations include net interest and general
corporate expenses, and the results of investments in technology
companies, real estate interests and other activities. In 1997,
Amoco transferred Canadian supply and marketing activities for
crude oil, sulfur and NGL to the petroleum products segment from
the E&P segment. Segment data for prior years have been restated.
Intersegment and intergeographic sales are accounted for at
prices that approximate market prices. 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.
Statement of Information by Geographic Area
United
(millions of dollars) States Canada Europe
Year 1997
Revenues other than
intergeographic sales $28,199 $3,389 $2,133
Intergeographic sales . 1,199 1,072 153
Total revenues ...... $29,398 $4,461 $2,286
Operating profit ...... $ 3,189 $ 561 $ 308
Net income ............ $ 2,333 $ 351 $ 135
Capital expenditures .. $ 1,615 $ 364 $ 612
Identifiable assets ... $19,783 $3,065 $2,982
Equity investments
and related advances $ 155 $ -- $ --
Equity in earnings
of others ........... $ 37 $ -- $ (8)
Consol-
Cor- idated
Other porate (*)
Year 1997
Revenues other than
intergeographic sales $2,456 $36,287
Intergeographic sales . 471 --
Total revenues ...... $2,927 $36,287
Operating profit ...... $ 466 $ 4,524
Net income ............ $ 196 $( 295) $ 2,720
Capital expenditures .. $ 698 $ 55 $ 3,344
Identifiable assets ... $3,863 $1,813 $30,470
Equity investments
and related advances $1,864 2,019
Total assets ........ $32,489
Equity in earnings
of others ........... $ (5) $ 24
(*) After elimination of intergeographic transactions.
Statement of Information by Geographic Area (continued)
United
(millions of dollars) States Canada Europe
Year 1996
Revenues other than
intergeographic sales $27,936 $3,472 $1,916
Intergeographic sales . 1,200 1,040 172
Total revenues ...... $29,136 $4,512 $2,088
Operating profit ...... $ 2,876 $ 563 $ 280
Net income ............ $ 2,094 $ 378 $ 126
Capital expenditures .. $ 2,219 $ 390 $ 636
Identifiable assets ... $20,319 $3,622 $3,101
Equity investments
and related advances $ 85 $ -- $ 2
Equity in earnings
of others ........... $ 32 $ -- $ 1
Consol-
Cor- idated
Other porate (*)
Year 1996
Revenues other than
intergeographic sales $2,583 $36,112
Intergeographic sales . 470 --
Total revenues ...... $3,053 $36,112
Operating profit ...... $ 742 $ 4,461
Net income ............ $ 444 $ (208) $ 2,834
Capital expenditures .. $ 690 $ 70 $ 4,005
Identifiable assets ... $3,612 $1,901 $31,358
Equity investments
and related advances $ 655 742
Total assets ........ $32,100
Equity in earnings
of others ........... $ 111 $ 144
(*) After elimination of intergeographic transactions.
Statement of Information by Geographic Area (continued)
United
(millions of dollars) States Canada Europe
Year 1995
Revenues other than
intergeographic sales $23,978 $2,676 $1,749
Intergeographic sales . 1,335 942 170
Total revenues ...... $25,313 $3,618 $1,919
Operating profit ...... $ 2,065 $ 29 $ 223
Net income ............ $ 1,582 $ 11 $ 142
Capital expenditures .. $ 2,039 $ 311 $ 452
Identifiable assets ... $18,880 $3,591 $2,755
Equity investments
and related advances $ 53 $ 32 $ 6
Equity in earnings
of others ........... $ 36 $ -- $ 1
Consol-
Cor- idated
Other porate (*)
Year 1995
Revenues other than
intergeographic sales $2,294 $31,004
Intergeographic sales . 404 --
Total revenues ...... $2,698 $31,004
Operating profit ...... $ 562 $ 2,879
Net income ............ $ 364 $ (237) $ 1,862
Capital expenditures .. $ 658 $ 66 $ 3,526
Identifiable assets ... $2,713 $2,189 $29,241
Equity investments
and related advances $ 513 604
Total assets ........ $29,845
Equity in earnings
of others ........... $ 133 $ 170
(*) After elimination of intergeographic transactions.
Statement of Information by Industry Segment
(millions of dollars) Petroleum Operations
Exploration
and Petroleum Chemical
Production Products Operations
Year 1997
Revenues other than intersegment
sales ......................... $ 7,393 $ 22,794 $ 5,941
Intersegment sales .............. 3,420 2,018 449
Total revenues ................ $ 10,813 $ 24,812 $ 6,390
Operating profit ................ $ 3,004 $ 862 $ 732
Equity in earnings of others .... (6) 35 (7)
General corporate amounts .......
Interest expense ................
Income taxes .................... (1,018) (310) (232)
Net income .................... $ 1,980 $ 587 $ 493
Depreciation and related charges $ 1,430 $ 455 $ 397
Capital expenditures ............ $ 2,115 $ 455 $ 652
Identifiable assets ............. $ 14,682 $ 7,520 $ 6,351
Equity investments and related
advances ...................... $ 1,260 $ 164 $ 569
Corporate
and
Other
Operations Consolidated*
Year 1997
Revenues other than intersegment
sales ......................... $ 48 $ 36,287
Intersegment sales .............. -- --
Total revenues ................ $ 48 $ 36,287
Operating profit ................ $ (74) $ 4,524
Equity in earnings of others .... 2 24
General corporate amounts ....... (371) (371)
Interest expense ................ (401) (401)
Income taxes .................... 504 (1,056)
Net income .................... $ (340) $ 2,720
Depreciation and related charges $ 91 $ 2,373
Capital expenditures ............ $ 122 $ 3,344
Identifiable assets ............. $ 2,399 $ 30,470
Equity investments and related
advances ...................... $ 26 2,019
Total assets .................. $ 32,489
* After elimination of intersegment transactions.
Statement of Information by Industry Segment (continued)
(millions of dollars) Petroleum Operations
Exploration
and Petroleum Chemical
Production Products Operations
Year 1996
Revenues other than intersegment
sales ......................... $ 6,409 $ 23,755 $ 5,698
Intersegment sales .............. 3,630 1,607 71
Total revenues ................ $ 10,039 $ 25,362 $ 5,769
Operating profit ................ $ 2,771 $ 771 $ 924
Equity in earnings of others .... (1) 32 112
General corporate amounts .......
Interest expense ................
Income taxes .................... (986) (275) (301)
Net income .................... $ 1,784 $ 528 $ 735
Depreciation and related charges $ 1,467 $ 456 $ 261
Capital expenditures ............ $ 2,404 $ 500 $ 985
Identifiable assets ............. $ 15,866 $ 7,415 $ 6,215
Equity investments and related
advances ...................... $ 71 $ 82 $ 565
Corporate
and
Other
Operations Consolidated*
Year 1996
Revenues other than intersegment
sales ......................... $ 44 $ 36,112
Intersegment sales .............. -- --
Total revenues ................ $ 44 $ 36,112
Operating profit ................ $ (5) $ 4,461
Equity in earnings of others .... 1 144
General corporate amounts ....... (448) (448)
Interest expense ................ (192) (192)
Income taxes .................... 431 (1,131)
Net income .................... $ (213) $ 2,834
Depreciation and related charges $ 87 $ 2,271
Capital expenditures ............ $ 116 $ 4,005
Identifiable assets ............. $ 2,513 $ 31,358
Equity investments and related
advances ...................... $ 24 742
Total assets .................. $ 32,100
* After elimination of intersegment transactions.
Statement of Information by Industry Segment (continued)
(millions of dollars) Petroleum Operations
Exploration
and Petroleum Chemical
Production Products Operations
Year 1995
Revenues other than intersegment
sales ......................... $ 4,717 $ 20,279 $ 5,655
Intersegment sales .............. 2,915 1,038 62
Total revenues ................ $ 7,632 $ 21,317 $ 5,717
Operating profit ................ $ 1,011 $ 687 $ 1,256
Equity in earnings of others .... -- 35 133
General corporate amounts .......
Interest expense ................
Income taxes .................... (317) (231) (426)
Net income .................... $ 694 $ 491 $ 963
Depreciation and related charges $ 1,971 $ 471 $ 293
Capital expenditures ............ $ 2,065 $ 500 $ 850
Identifiable assets ............. $ 14,372 $ 7,445 $ 5,183
Equity investments and related
advances ...................... $ 47 $ 33 $ 502
Corporate
and
Other
Operations Consolidated*
Year 1995
Revenues other than intersegment
sales ......................... $ 46 $ 31,004
Intersegment sales .............. -- --
Total revenues ................ $ 46 $ 31,004
Operating profit ................ $ (75) $ 2,879
Equity in earnings of others .... 2 170
General corporate amounts ....... (310) (310)
Interest expense ................ (335) (335)
Income taxes .................... 432 (542)
Net income .................... $ (286) $ 1,862
Depreciation and related charges $ 59 $ 2,794
Capital expenditures ............ $ 111 $ 3,526
Identifiable assets ............. $ 2,705 $ 29,241
Equity investments and related
advances ...................... $ 22 604
Total assets .................. $ 29,845
* After elimination of intersegment transactions.
AMOCO CORPORATION AND SUBSIDIARIES
___________________________
SUPPLEMENTAL INFORMATION
1. OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
The tables presented below provide supplemental information
about oil and gas exploration and production activities as defined
by SFAS No. 69, "Disclosures about Oil and Gas Producing
Activities." This information excludes activities associated with
marketing of natural gas and Amoco's economic interest in equity
affiliates.
Results of Operations for Oil and Gas Producing Activities
United World-
(millions of dollars) States Canada Europe Other wide
1997
Oil and gas production
revenues:
From consolidated
subsidiaries ........... $2,938 $ 306 $ -- $ 957 $4,201
From unaffiliated entities 576 387 836 788 2,587
Other revenues ............. 617 86 226 75 1,004
Total revenues ........... 4,131 779 1,062 1,820 7,792
Production costs:
Taxes other than income .. 229 14 41 137 421
Other production costs ... 776 230 314 487 1,807
Exploration expenses ....... 101 69 159 270 599
Depreciation, depletion and
amortization expense ..... 616 178 220 329 1,343
Other related costs ........ 508 35 37 134 714
Total costs .............. 2,230 526 771 1,357 4,884
Operating profit ........... 1,901 253 291 463 2,908
Income tax expense ......... 476 109 142 268 995
Results of operations .... $1,425 $ 144 $ 149 $ 195 $1,913
Results of Operations for Oil and Gas Producing Activities
(continued)
United World-
(millions of dollars) States Canada Europe Other wide
1996
Oil and gas production
revenues:
From consolidated
subsidiaries ........... $3,075 $ 369 $ 3 $1,146 $4,593
From unaffiliated entities 719 346 817 853 2,735
Other revenues ............. 111 86 83 97 377
Total revenues ........... 3,905 801 903 2,096 7,705
Production costs:
Taxes other than income .. 261 15 33 170 479
Other production costs ... 760 235 256 414 1,665
Exploration expenses ....... 142 68 141 265 616
Depreciation, depletion and
amortization expense ..... 682 190 164 351 1,387
Other related costs ........ 459 43 64 130 696
Total costs .............. 2,304 551 658 1,330 4,843
Operating profit ........... 1,601 250 245 766 2,862
Income tax expense ......... 398 54 127 433 1,012
Results of operations .... $1,203 $ 196 $ 118 $ 333 $1,850
1995
Oil and gas production
revenues:
From consolidated
subsidiaries ........... $2,223 $ 331 $ -- $ 908 $3,462
From unaffiliated entities 512 274 719 717 2,222
Other revenues ............. 155 100 102 92 449
Total revenues ........... 2,890 705 821 1,717 6,133
Production costs:
Taxes other than income .. 179 13 25 112 329
Other production costs ... 744 240 233 369 1,586
Exploration expenses ....... 152 112 123 223 610
Depreciation, depletion and
amortization expense ..... 973 350 197 337 1,857
Other related costs ........ 321 73 85 117 596
Total costs .............. 2,369 788 663 1,158 4,978
Operating profit ........... 521 (83) 158 559 1,155
Income tax expense ......... 15 (37) 70 314 362
Results of operations .... $ 506 $ (46) $ 88 $ 245 $ 793
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 1997 included gains on the sale of
non-core U.S. and European properties. 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. 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.
DD&A expense relates to capitalized costs incurred in acquisition,
exploration and development activities and does not include
depreciation applicable to support equipment. In 1995, DD&A
included $355 million and $121 million in the United States and
Canada, respectively, related to impairment of long-lived assets.
Included in other related costs are significant, non-recurring
items and purchases of natural gas for field natural gas liquids
plants.
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.
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, 1997, 1996 and 1995. The amount shown for affiliates
represents Amoco's proportionate economic interest in the estimated
discounted future net cash flows of equity affiliates.
United World-
(millions of dollars) States Canada Europe Other wide
December 31, 1997
Future cash inflows ....... $41,138 $ 7,381 $ 9,441 $19,302 $ 77,262
Future development and
production costs ........ 15,178 3,210 4,582 7,192 30,162
Future income taxes ....... 6,885 1,426 1,882 6,049 16,242
Future net cash flows ..... 19,075 2,745 2,977 6,061 30,858
Ten percent annual discount 10,397 1,093 1,025 2,997 15,512
Discounted net cash flows . $ 8,678 $ 1,652 $ 1,952 $ 3,064 $ 15,346
Affiliates ................ $ -- $ -- $ -- $ 809 $ 809
December 31, 1996
Future cash inflows ....... $65,932 $10,929 $11,546 $21,813 $110,220
Future development and
production costs ........ 15,749 3,665 4,174 7,595 31,183
Future income taxes ....... 15,497 2,592 3,035 5,854 26,978
Future net cash flows ..... 34,686 4,672 4,337 8,364 52,059
Ten percent annual discount 19,194 2,115 1,759 3,700 26,768
Discounted net cash flows . $15,492 $ 2,557 $ 2,578 $ 4,664 $ 25,291
December 31, 1995
Future cash inflows ....... $33,326 $ 7,534 $ 8,671 $13,359 $ 62,890
Future development and
production costs ........ 15,923 3,759 4,174 5,173 29,029
Future income taxes ....... 4,438 1,155 1,841 3,401 10,835
Future net cash flows ..... 12,965 2,620 2,656 4,785 23,026
Ten percent annual discount 7,385 1,013 948 1,844 11,190
Discounted net cash flows . $ 5,580 $ 1,607 $ 1,708 $ 2,941 $ 11,836
Future cash inflows are computed by applying the year-end
prices of oil and gas to proved reserve quantities as reported
under "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, 1997:
(millions of dollars) 1997 1996 1995
Balance at January 1 $25,291 $11,836 $10,991
Changes resulting from:
Sales and transfers of oil and gas
produced, net of production costs (4,560) (5,184) (3,769)
Net changes in prices, and
development and production costs (15,208) 17,332 407
Current-year expenditures for
development ..................... 2,077 2,007 1,707
Extensions, discoveries and
improved recovery, less
related costs ................... 2,056 3,928 1,922
(Sales) purchases of reserves
in place ........................ (2,287) (332) 128
Revisions of previous quantity
estimates ....................... 31 445 56
Accretion of discount ............. 3,763 1,735 1,441
Net change in income taxes ........ 5,073 (7,375) (833)
Other ............................. (890) 899 (214)
Balance at December 31 .............. $15,346 $25,291 $11,836
The prices of crude oil and natural gas have fluctuated over
the past several years, which effects the computed future cash
flows over the period shown. Because the price of crude oil and
natural gas is likely to remain volatile in the future, price
changes can be expected to continue to significantly affect the
standardized measure of discounted future net cash flows.
Estimated Proved Reserves
Net proved reserves of crude oil (including condensate), NGL
and natural gas at the beginning and end of 1997, 1996 and 1995,
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. The amounts shown for affiliates
represent Amoco's proportionate economic interest in estimated
proved reserves of equity affiliates.
Crude Oil and NGL Reserves
Consolidated
United States Canada Europe
Crude Crude Oil Crude Oil
(millions of barrels) Oil NGL and NGL and NGL
Proved reserves:
December 31, 1994 ........ 786 447 286 191
Revisions of previous
estimates ............ 5 12 5 3
Improved recovery
applications ......... 12 2 41 25
Extensions, discoveries
and other additions .. 27 9 53 16
Purchases of reserves in
place ................ 4 3 2 56
Sales of reserves in
place ................ (1) (3) (23) --
Production ............. (66) (22) * (25) (23)
December 31, 1995 ........ 767 448 339 268
Revisions of
previous estimates ... (1) (19) (2) 2
Improved recovery
applications ......... 25 9 24 9
Extensions, discoveries
and other additions .. 12 7 93 73
Purchases of reserves
in place ............. 3 3 -- --
Sales of reserves
in place ............. (9) (4) (49) --
Production ............. (65) (27) * (22) (22)
December 31, 1996 ........ 732 417 383 330
Revisions of
previous estimates ... 166 (34) 6 11
Improved recovery
applications ......... 6 4 1 7
Extensions, discoveries
and other additions .. 41 5 47 4
Purchases of reserves
in place ............. 11 1 2 --
Sales of reserves
in place ............. (107) (78) (11) --
Production ............. (60) (24) * (22) (24)
December 31, 1997......... 789 291 406 328
Proved developed reserves:
December 31, 1994 ........ 727 404 236 160
December 31, 1995 ........ 713 409 260 150
December 31, 1996 ........ 675 376 274 146
December 31, 1997 ........ 638 267 284 149
Crude Oil and NGL Reserves (continued)
Consolidated
Other Total Affiliates Worldwide
Crude Oil Crude Oil Crude Oil Crude Oil
(millions of barrels) and NGL and NGL and NGL and NGL
Proved reserves:
December 31, 1994 .......... 495 2,205 -- 2,205
Revisions of previous
estimates .............. 12 37 -- 37
Improved recovery
applications ........... 29 109 -- 109
Extensions, discoveries
and other additions .... 54 159 -- 159
Purchases of reserves in
place .................. 8 73 -- 73
Sales of reserves in place (12) (39) -- (39)
Production ............... (86) (222) -- (222)
December 31, 1995 .......... 500 2,322 -- 2,322
Revisions of
previous estimates ..... 21 1 -- 1
Improved recovery
applications ........... 15 82 -- 82
Extensions, discoveries
and other additions .... 114 299 -- 299
Purchases of reserves
in place ............... -- 6 -- 6
Sales of reserves in place -- (62) -- (62)
Production ............... (89) (225) -- (225)
December 31, 1996 .......... 561 2,423 -- 2,423
Revisions of
previous estimates ..... 27 176 -- 176
Improved recovery
applications ........... 32 50 -- 50
Extensions, discoveries
and other additions .... 71 168 -- 168
Purchases of reserves
in place ............... 46 60 166 226
Sales of reserves in place (214) (410) -- (410)
Production ............... (84) (214) (2) (216)
December 31, 1997........... 439 2,253 164 2,417
Proved developed reserves:
December 31, 1994 .......... 387 1,914 -- 1,914
December 31, 1995 .......... 386 1,918 -- 1,918
December 31, 1996 .......... 411 1,882 -- 1,882
December 31, 1997 .......... 308 1,646 120 1,766
(*) Excludes non-leasehold NGL production attributable to processing plant
ownership of approximately 15 million barrels for 1995, 1996 and 1997.
Natural Gas Reserves
Consolidated
United
(billions of cubic feet) States Canada Europe Other
Proved reserves:
December 31, 1994 ............. 11,728 3,022 1,388 2,383
Revisions of
previous estimates ........ (198) (25) 11 126
Improved recovery
applications .............. 139 11 39 102
Extensions, discoveries
and other additions ....... 475 174 72 1,082
Purchases of reserves
in place .................. 305 36 -- --
Sales of reserves in place .. (76) (78) (26) --
Production .................. (891) (302) (131) (213)
December 31, 1995 ............. 11,482 2,838 1,353 3,480
Revisions of
previous estimates ........ (796) (55) 38 129
Improved recovery
applications .............. 214 12 9 --
Extensions, discoveries
and other additions ....... 378 79 3 2,871
Purchases of reserves
in place .................. 300 21 -- --
Sales of reserves in place .. (154) (259) -- (20)
Production .................. (918) (293) (143) (223)
December 31, 1996 ............. 10,506 2,343 1,260 6,237
Revisions of
previous estimates ........ (308) 96 6 918
Improved recovery
applications .............. 100 11 2 93
Extensions, discoveries
and other additions ....... 664 112 41 734
Purchases of reserves
in place .................. 170 27 -- 980
Sales of reserves in place .. (1,188) (113) (10) (1,101)
Production .................. (847) (279) (141) (225)
December 31, 1997.............. 9,097 2,197 1,158 7,636
Proved developed reserves:
December 31, 1994 ............. 10,829 2,643 1,028 1,038
December 31, 1995 ............. 10,443 2,559 1,017 1,422
December 31, 1996 ............. 9,304 2,156 961 1,745
December 31, 1997 ............. 8,017 1,980 1,034 2,066
Natural Gas Reserves (continued)
Consoli-
dated
(billions of cubic feet) Total Affiliates Worldwide
Proved reserves:
December 31, 1994 ............. 18,521 -- 18,521
Revisions of
previous estimates ........ (86) -- (86)
Improved recovery
applications .............. 291 -- 291
Extensions, discoveries
and other additions ....... 1,803 -- 1,803
Purchases of reserves
in place .................. 341 -- 341
Sales of reserves in place .. (180) -- (180)
Production .................. (1,537) -- (1,537)
December 31, 1995 ............. 19,153 -- 19,153
Revisions of
previous estimates ........ (684) -- (684)
Improved recovery
applications .............. 235 -- 235
Extensions, discoveries
and other additions ....... 3,331 -- 3,331
Purchases of reserves
in place .................. 321 -- 321
Sales of reserves in place .. (433) -- (433)
Production .................. (1,577) -- (1,577)
December 31, 1996 ............. 20,346 -- 20,346
Revisions of
previous estimates ........ 712 -- 712
Improved recovery
applications .............. 206 -- 206
Extensions, discoveries
and other additions .......
Purchases of reserves 1,551 -- 1,551
in place .................. 1,177 1,374 2,551
Sales of reserves in place .. (2,412) -- (2,412)
Production .................. (1,492) (6) (1,498)
December 31, 1997.............. 20,088 1,368 21,456
Proved developed reserves:
December 31, 1994 ............. 15,538 -- 15,538
December 31, 1995 ............. 15,441 -- 15,441
December 31, 1996 ............. 14,166 -- 14,166
December 31, 1997 ............. 13,097 807 13,904
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 World-
(millions of dollars) States Canada Europe Other wide
December 31, 1997
Unproved properties:
Gross assets ............ $ 467 $ 270 $ 81 $ 143 $ 961
Accumulated amortization 96 107 26 7 236
Net assets ............ 371 163 55 136 725
Proved properties:
Gross assets ............ 14,019 3,334 3,538 6,469 27,360
Accumulated depreciation,
depletion, etc. ......... 8,245 1,807 1,942 4,743 16,737
Net assets ............ 5,774 1,527 1,596 1,726 10,623
Support equipment and
facilities:
Gross assets ............ 386 112 220 278 996
Accumulated depreciation 203 64 84 248 599
Net assets ............ 183 48 136 30 397
Net capitalized costs ..... $6,328 $1,738 $1,787 $1,892 $11,745
December 31, 1996
Unproved properties:
Gross assets ............ $ 477 $ 232 $ 98 $ 303 $ 1,110
Accumulated amortization 97 104 6 7 214
Net assets ............ 380 128 92 296 896
Proved properties:
Gross assets ............ 15,341 3,364 3,207 6,728 28,640
Accumulated depreciation,
depletion, etc. ......... 8,927 1,809 1,767 5,045 17,548
Net assets ............ 6,414 1,555 1,440 1,683 11,092
Support equipment and
facilities:
Gross assets ............ 369 88 171 325 953
Accumulated depreciation 163 55 79 238 535
Net assets ............ 206 33 92 87 418
Net capitalized costs ..... $7,000 $1,716 $1,624 $2,066 $12,406
1997 excludes $2.0 billion associated with Amoco's interest in
affiliates.
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 World-
(millions of dollars) States Canada Europe Other wide
Year 1997
Property acquisition:
Proved .............. $ 2 $ 5 $ -- $ 2 $ 9
Unproved ............ 38 9 33 2 82
Exploration ........... 261 83 176 372 892
Development ........... 823 327 268 659 2,077
Total ............. $1,124 $ 424 $ 477 $1,035 $3,060
Year 1996
Property acquisition:
Proved .............. $ 113 $ 23 $ -- $ 10 $ 146
Unproved ............ 67 20 -- 54 141
Exploration ........... 313 77 174 369 933
Development ........... 833 327 436 411 2,007
Total ............. $1,326 $ 447 $ 610 $ 844 $3,227
Year 1995
Property acquisition:
Proved .............. $ 176 $ 6 $ -- $ -- $ 182
Unproved ............ 74 33 -- 28 135
Exploration ........... 262 124 179 409 974
Development ........... 769 288 344 306 1,707
Total ............. $1,281 $ 451 $ 523 $ 743 $2,998
1997 excludes $865 million in cash for Amoco's interest in
affiliates.
2. QUARTERLY RESULTS AND STOCK MARKET DATA
Net Net
Income Income
Net Per Per Share
Operating Income Share (Assuming
Revenues Profit (1) (Basic) Dilution)
(millions of dollars, except as noted)
1997
First quarter .. $ 8,993 $ 1,149 $ 674 $ 1.36 $ 1.35
Second quarter . 8,624 1,036 622 1.26 1.25
Third quarter .. 8,983 1,099 635 1.30 1.29
Fourth quarter . 9,687 1,240 789 1.63 1.62
1996
First quarter .. $ 8,214 $ 1,092 $ 728 $ 1.47 $ 1.46
Second quarter . 8,765 989 600 1.20 1.20
Third quarter .. 9,018 1,019 635 1.28 1.27
Fourth quarter . 10,115 1,361 871 1.74 1.73
Cash
Dividends Common Stock
Per Price Ranges (2)
Share High Low
1997
First quarter .. $ .70 $ 91 5/8 $ 80 1/4
Second quarter . .70 91 7/8 79 1/4
Third quarter .. .70 99 87
Fourth quarter . .70 98 3/8 81 13/16
1996
First quarter .. $ .65 $ 74 1/8 $ 67 1/2
Second quarter . .65 75 1/8 69 1/2
Third quarter .. .65 72 5/8 65
Fourth quarter . .65 83 1/2 70 1/4
(1) Fourth-quarter 1997 earnings included net gains of $271
million primarily associated with asset dispositions, including the
sale of certain non-core oil and gas properties in the United
States. Fourth-quarter 1996 earnings included a gain of $90 million
related to a reduction in LIFO inventory levels. Third-quarter 1996
earnings included a gain on the sale of Amoco's polystyrene foam
products business of $97 million. Gains of $56 million on certain
Canadian asset dispositions benefited first-quarter 1996 results.
(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 Swiss stock exchanges.
3. MARKET RISKS AND DERIVATIVE INSTRUMENTS
In the normal course of business, Amoco holds or issues
various financial instruments which expose the Corporation to
financial risk associated with market currency exchange rates and
interest rates. Also, Amoco's petroleum and chemical businesses are
affected by commodity price movements. To manage a portion of these
inherent risks, Amoco purchases and sells various derivative
financial instruments and commodity futures contracts.
Substantially all financial instruments held by the Corporation are
for purposes other than trading.
Currency Risks
The Corporation conducts its business primarily in U.S.
dollars. Prices for most of the Corporation's products are based on
global market prices which are affected primarily by U.S. dollars.
Similarly, prices for non-proprietary feedstocks for most of the
Corporation's operations are generally based on U.S. dollars.
Significant exposures to specific foreign currency exchange risk
are reduced through the use of financial instruments, primarily by
hedging of foreign currency borrowings and contractual commitments.
The table below shows the amount of foreign currency forward
contracts that have been designated as hedges of foreign currency
debt. In addition, forward contracts to acquire Singapore dollars
with a face amount of $4 million, which hedge the Corporation's
foreign currency exposure associated with certain construction
contracts, were outstanding at December 31, 1997. The forward
contracts matured in January 1998.
Interest Rate Risks
The table below also provides information about the interest
rates of the Corporation's debt obligations. The table shows the
amount of debt, including current portion, and related weighted
average interest rates, as of December 31, 1997, by expected
maturity dates. Weighted average variable rates are based on
forward rates as of December 31, 1997.
Expected Maturity Date
1998 1999 2000 2001
(millions of U.S. dollars)
U.S. DOLLAR:
Debt
- -- Fixed rate ......... $ 27 $ 4 $ 3 $ 33
- -- Avg. interest rate . 6.5% 10.1% 10.1% 10.4%
- -- Variable rate ...... $ 12 $ 105 $ 164 $ 82
- -- Avg. interest rate . 6.5% 6.6% 6.9% 6.9%
BRITISH POUND:
Debt
- -- Variable rate ...... $ 120 $ 65 $ 65 $ 190
- -- Avg. interest rate . 6.5% 6.8% 7.0% 7.1%
Forward purchases*..... $ 935 $ -- $ -- $ --
CANADIAN DOLLAR:
Debt
- -- Fixed rate ......... $ 48 $ 46 $ 42 $ 39
- -- Avg. interest rate . 6.7% 6.7% 6.7% 6.7%
Forward purchases ..... $ 56 $ 56 $ 56 $ 56
Expected
Maturity
Date
2002 Thereafter Total Fair Value
(millions U.S. of dollars)
U.S. DOLLAR:
Debt
- -- Fixed rate ......... $ 552 $1,793 $2,412 $2,457
- -- Avg. interest rate . 7.3% 7.1% 7.2%
- -- Variable rate ...... $ 232 $ 999 $1,594 $1,594
- -- Avg. interest rate . 6.9% 5.5% 6.0%
BRITISH POUND:
Debt
- -- Variable rate ...... $ 90 $ 94 $ 624 $ 624
- -- Avg. interest rate . 7.2% 7.2% 7.0%
Forward purchases*..... $ -- $ -- $ 935 $ 10
CANADIAN DOLLAR:
Debt
- -- Fixed rate ......... $ -- $ 41 $ 216 $ 234
- -- Avg. interest rate . -- 6.1% 6.5%
Forward purchases ..... $ -- $ -- $ 224 $ (8)
* Forward purchases are renewed periodically to match debt
maturities.
Commodity Price Risks
Amoco is a vertically integrated petroleum and chemical
company. The hydrocarbon commodity markets are influenced by global
as well as regional supply and demand. Worldwide political events
can also impact commodity prices. Amoco's policy generally is to be
exposed to market pricing for commodity purchases and sales.
Accordingly, the forward energy markets have been used primarily to
refloat fixed-price purchases and sales of crude oil, gasoline,
heating oil, and natural gas. Most of the contracts listed below
are for this purpose. However, Amoco occasionally uses forward
sales of its commodity products to fix prices that are favorable
with respect to its future price forecasts, reducing its natural
long exposure to commodity prices. At December 31, 1997, Amoco had
sold forward 4 million barrels of crude oil and 6 trillion Btus of
natural gas production for periods of less than one year.
The table below provides information about the Corporation's
futures, swaps and option contracts that are sensitive to
hydrocarbon price changes. Contract amounts represent the notional
amount of the contract. Fair value represents the amount that
would have been required to terminate the contracts at December 31,
1997. Weighted average price represents the year-end forward price
for futures; the fixed price and the year-end forward price related
to the settlement month for swaps; and the weighted average strike
price for options.
Commodity Price Risks (continued)
Fair
Contract Value
Quantity Amount Favorable
(000 (millions of dollars)
Barrels)
Crude Oil:
Maturing in 1998
Futures-short ............. 740 $ 13 $ 1
Options-owned puts ........ 50 $ 1 $ --
Swaps-receive
fixed pay variable ...... 3,900 $ 82 $ 11
Maturing in 1999
Futures-long .............. 9 $ -- $ --
Refined Products: (million
gallons)
Heating oil
Maturing in 1998
Futures-long .............. 49 $ 26 $ --
Maturing in 1999
Futures-long .............. 1 $ 1 $ --
Unleaded Gasoline
Maturing in 1998
Futures-long .............. 3 $ 1 $ --
Natural Gas: (trillion
Btus)
Maturing in 1998
Futures-long .............. 3 $ 6 $ --
Options-owned puts ........ 3 $ 3 $ --
Options-written puts ...... 6 $ 11 $ --
Options-owned calls ....... 6 $ 14 $ --
Options-written calls ..... 1 $ 2 $ --
Swaps-receive
fixed pay variable ...... 52 $ 88 $ 12
Swaps-receive
variable pay fixed ...... 95 $166 $ 4
Swaps-receive
and pay variable ........ 198 $410 $ 4
Commodity Price Risks (continued)
Fair Weighted Average
Value Price
Unfavorable Receive Pay
(millions (dollar/barrel)
Crude Oil: of dollars)
Maturing in 1998
Futures-short ............. $ 1 $17.91 $ --
Options-owned puts ........ $ -- $17.00 $ --
Swaps receive
fixed pay variable ...... $ -- $21.00 $18.29
Maturing in 1999
Futures-long .............. $ -- $ -- $18.64
Refined Products: (dollar/gallon)
Heating oil
Maturing in 1998
Futures-long .............. $ 2 $ -- $ .50
Maturing in 1999
Futures-long .............. $ -- $ -- $ .54
Unleaded Gasoline
Maturing in 1998
Futures-long .............. $ -- $ -- $ .53
Natural Gas: (dollar/mmBtu)
Maturing in 1998
Futures-long .............. $ -- $ -- $ 2.21
Options-owned puts ........ $ -- $ 1.31 $ --
Options-written puts ...... $ 1 $ -- $ 1.80
Options-owned calls ....... $ -- $ -- $ 2.28
Options-written calls ..... $ -- $ 1.46 $ --
Swaps-receive
fixed pay variable ...... $ 1 $ 1.69 $ 1.48
Swaps-receive
variable pay fixed ...... $ 14 $ 1.64 $ 1.75
Swaps-receive
and pay variable ........ $ 5 $ 2.07 $ 2.07
Commodity Price Risks (continued)
Contract Fair Value
Quantity Amount Favorable
(trillion (millions of dollars)
Btus)
Natural Gas:
Maturing in 1999
Options-written puts ...... 1 $ 3 $ --
Options-owned calls ....... 1 $ 4 $ --
Options-written calls ..... 1 $ 1 $ --
Swaps-receive
fixed pay variable ...... 6 $ 11 $ 1
Swaps-receive
variable pay fixed ...... 6 $ 10 $ 1
Swaps-receive
and pay variable ........ 10 $ 22 $ --
Maturing in 2000
Swaps-receive
fixed pay variable ...... 1 $ 1 $ --
Swaps-receive
variable pay fixed ...... 4 $ 8 $ 1
Swaps-receive
and pay variable ........ 2 $ 3 $ --
Fair Weighted Average
Value Price
Unfavorable Receive Pay
(millions (dollar/mmBtu)
of dollars)
Natural Gas:
Maturing in 1999
Options-written puts ...... $ -- $ -- $ 2.27
Options-owned calls ....... $ -- $ -- $ 2.56
Options-written calls ..... $ -- $ 1.42 $ --
Swaps-receive
fixed pay variable ...... $ -- $ 1.82 $ 1.73
Swaps receive
variable pay fixed ...... $ -- $ 1.91 $ 1.77
Swaps-receive
and pay variable ........ $ -- $ 2.30 $ 2.29
Maturing in 2000
Swaps-receive
fixed pay variable ..... $ -- $ 1.69 $ 1.58
Swaps-receive
variable pay fixed ..... $ -- $ 1.99 $ 1.87
Swaps-receive
and pay variable ....... $ -- $ 1.99 $ 1.99
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 2-7 of Amoco's
Proxy Statement dated March 16, 1998. Also, see heading "Executive
Officers of the Registrant" of this Form 10-K.
Item 11. Executive Compensation
The information required by this item is incorporated by
reference to pages 8-15 of Amoco's Proxy Statement dated March 16,
1998. 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 2, 7, 8, 9, 10 and 11 of Amoco's Proxy Statement
dated March 16, 1998.
Item 13. Certain Relationships and Related Transactions
During 1997, the Corporation and its subsidiaries had purchase
and sale transactions with unaffiliated companies of which certain
of the Corporation's non-employee directors or director nominees
were executive officers or directors. Such transactions were made
in the ordinary course of business at competitive prices and terms
and are not considered material.
___________________________
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 under Part II, Item 8, "Financial Statements and
Supplemental Information."
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.
3. Exhibits
See "Index to Exhibits."
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
December 31, 1997.
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 20th day of March, 1998.
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
20, 1998.
Signatures Titles
H. L. FULLER* Chairman of the Board and Director
H. L. Fuller (Principal Executive Officer)
W. G. LOWRIE* President and Director
W. G. Lowrie
JOHN L. CARL* Executive Vice President and Chief
John L. Carl Financial Officer
(Principal Financial Officer)
JUDITH G. BOYNTON* Vice President and Controller
Judith G. Boynton (Principal Accounting Officer)
DONALD R. BEALL* Director
Donald R. Beall
RUTH BLOCK* Director
Ruth Block
Signatures Titles
JOHN H. BRYAN* Director
John H. Bryan
ERROLL B. DAVIS, JR.* Director
Erroll B. Davis Jr.
RICHARD FERRIS* Director
Richard Ferris
F. A. MALJERS* Director
F. A. Maljers
ARTHUR C. MARTINEZ* Director
Arthur C. Martinez
WALTER E. MASSEY* Director
Walter E. Massey
MARTHA R. SEGER* Director
Martha R. Seger
THEODORE M. SOLSO* Director
Theodore M. Solso
MICHAEL WILSON* Director
Michael Wilson
*By
JOHN L. CARL Individually and as Attorney-in-Fact
John L. Carl
SCHEDULE II
AMOCO CORPORATION
___________________________
VALUATION AND QUALIFYING ACCOUNTS(1)
For the Year Ended December 31,
(millions of dollars)
Additions
Balance Charged
at to costs Charged Deduc- Balance
beginning and to other tions at end
Description of year expenses accounts (2) of year
1997
Allowance for
doubtful notes and
accounts receivable $ 17 $ 7 $ -- $ 14 $ 10
1996
Allowance for
doubtful notes and
accounts receivable 16 4 -- 3 17
1995
Allowance for
doubtful notes and
accounts receivable 23 7 -- 14 16
(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.
AMOCO CORPORATION
___________________________
INDEX TO EXHIBITS
Exhibit
Number Exhibit
3(a) The Amended Articles of Incorporation of the registrant, *
and amendments thereto.
3(b) The Amended By-laws of the registrant dated *
January 27, 1998.
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 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) Employment arrangements between the registrant
and Enrique J. Sosa are incorporated by reference to
Exhibit 10(b) to the registrant's Annual Report on
Form 10-K for the year ended December 31, 1996.
--Employment Agreement dated November 22, 1995;
--Letter Agreement amending Employment
Agreement dated October 28, 1996;
--Restricted Stock Agreement under the 1991
Incentive Program of Amoco Corporation and
its Participating Subsidiaries, dated
October 2, 1995;
--Stock Option Agreement under the 1991 Incentive
Program of Amoco Corporation and its Participating
Subsidiaries, dated March 26, 1996.
--Stock Option Agreement under the 1991 Incentive
Program of Amoco Corporation and its
Participating Subsidiaries, dated October 2, 1995;
*Included herein.
10 (b) --Deferred Sign-On Bonus Agreement, dated
(cont.) September 25, 1995.
--Stock Option Agreement under the 1991 Incentive *
Program of Amoco Corporation and its Participating
Subsidiaries, dated March 25, 1997;
10(c) The 1986 Management Incentive Program of Amoco
Corporation and its Participating Subsidiaries, as
amended through April 25, 1989, is incorporated 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 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 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, as amended and restated
effective November 1, 1996 is incorporated by reference
to Exhibit 10(e) to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1996.
10(f) Restricted Stock Plan for Non-Employee Directors and
Retainer Stock Plan for Non-Employee Directors are
incorporated by reference to pages 20 through 26 of
the registrant's Proxy Statement dated March 16, 1989.
10(g) Amoco Employee Savings Plan as amended and *
restated, effective July 1, 1996.
--Seventh Amendment of Amoco Employee Savings Plan *
effective January 11, 1998.
--Sixth Amendment of Amoco Employee Savings Plan *
effective January 1, 1998.
--Fifth Amendment of Amoco Employee Savings Plan *
effective December 1, 1997.
--Fourth Amendment of Amoco Employee Savings Plan *
effective January 1, 1998.
--Third Amendment of Amoco Employee Savings Plan *
effective December 31, 1997.
--Second Amendment of Amoco Employee Savings Plan *
effective October 1, 1997.
*Included herein.
10(g) --Third Amendment of Amoco Employee Savings Plan *
(cont.) effective March 1, 1997.
10(h) Deferral and Restoration Plans are incorporated
by reference to Exhibit 10(h) to the registrant's
Annual Report on Form 10-K for the year ended
December 31, 1995.
--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.
10(i) Amoco Fabrics and Fibers Company Hourly 401(k) Savings
Plan ("AFFC Hourly Plan") as amended and restated,
effective January 1, 1996 is incorporated by reference
to Exhibit 10(i) to the registrant's Annual Report on
Form 10-K for the year ended December 31, 1995.
Amendments to the AFFC Hourly Plan effective
November 1, 1996 are incorporated by reference to
Exhibit 10(i) to the registrant's Annual Report on
Form 10-K for the year ended December 31, 1996.
10(j) Amoco Fabrics and Fibers Company Salaried 401(k)
Savings Plan, effective January 1, 1996, and
amendments to such plan effective November 1, 1996
are incorporated by reference to Exhibit 10(j) to the
registrant's Annual Report on Form 10-K for the year
ended December 31, 1996.
10(k) Deferral and Restoration Plans are incorporated by
reference to Exhibit 10(k) to the registrant's Annual
Report or Form 10-K for the year-ended December 31, 1996
--Amoco Performance Share Restoration Plan,
amended and restated effective as of
January 1, 1997;
--Deferral Savings Restoration Plan of Amoco
Corporation and Participating Companies,
amended and restated as of November 1, 1996;
*Included herein.
10(k) --ERISA Savings Restoration Plan of Amoco
(cont.) Corporation and Participating Companies,
amended and restated as of November 1, 1996;
--Amoco Corporation Directors' Deferred Fee
Plan, as amended and restated effective
November 1, 1996; and
--Amoco Corporation Bonus Deferral Plan for
1991 Incentive Program, as amended and
restated effective November 1, 1996.
11 Computation of Basic and Diluted Net Income Per Share *
for the three years ended December 31, 1997.
12 Statement Setting Forth Computation of Ratio of *
Earnings to Fixed Charges for the five years ended
December 31, 1997.
13 None.
16 None.
18 None.
21 Subsidiaries of the registrant *
22 None.
23 Consent of Price Waterhouse LLP. *
24 Powers of Attorney are incorporated by reference to
Exhibit 24 to the registrant's Annual Report on
Form 10-K for the period ended December 31, 1995 or
to
Exhibit 24 to the registrant's Annual Report on Form
10-K for the year ended December 31, 1996.
27 Financial Data Schedule for the year ended *
December 31, 1997.
28 None.
*Included herein.