EXHIBIT 99.1
TEXACO REPORTS SECOND QUARTER 2001 RESULTS
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FOR IMMEDIATE RELEASE: WEDNESDAY, JULY 25, 2001.
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WHITE PLAINS, N.Y., July 25 -- Texaco reported today second
quarter 2001 income before special items of $817 million ($1.50 per
share). Net income for the period was $784 million ($1.44 per share).
EARNINGS SUMMARY
Second Quarter Six Months
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2001 2000 2001 2000
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Income before special items (millions) $ 817 $ 641 $1,653 $1,243
Per share $ 1.50 $ 1.17 $ 3.03 $ 2.27
Net income (millions) $ 784 $ 625 $1,617 $1,199
Per share $ 1.44 $ 1.14 $ 2.97 $ 2.19
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Chairman and Chief Executive Officer Glenn Tilton commented,
"Texaco's earnings were outstanding, exceeding $800 million for the
fourth consecutive quarter. In an environment of favorable industry
conditions we continue to successfully execute our business plans.
This quarter's results included record earnings in our U.S.
downstream, as Equilon and Motiva sharply improved their operating
performance. Motiva's results were especially strong, benefiting from
robust refining margins on the East and Gulf Coasts and high refinery
run rates. While refining margins have contracted, marketing margins
have increased from their low levels early in the second quarter. This
benefited Equilon's operations late in the quarter.
"In the upstream, we turned in another excellent quarter as crude
oil prices were firm while U.S. natural gas prices were significantly
higher than a year ago. However, weakening demand and increasing
inventories have caused crude oil and natural gas prices to drop in
recent weeks. Looking to the future, we continue to strengthen our
upstream portfolio. Our high impact deepwater exploration program
yielded two exciting discoveries in the Gulf of Mexico. The Blind
Faith discovery on
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Mississippi Canyon Block 696 and the Champlain discovery in
Atwater Valley Block 63 should add significantly to our future
production and reserves. Also, the Hamaca project in Venezuela
attained major milestones this quarter with the closing of a $1.1
billion financing package and the completion of a two-year site
preparation program.
"Our Global Gas, Power and Energy Technology segment showed
significant improvement over last year. Our U.S. natural gas trading
business posted strong results as it continued to capitalize on
significantly increased trading volumes through the delivery of
structured, customer-based services. At the end of June, operations
began at our newest facility, the 320 megawatt Sunrise Power Project
in California. This plant started up ahead of schedule and will bring
much-needed energy to homes and businesses in California."
Commenting on our proposed merger with Chevron Corporation, Tilton
concluded, "While maintaining focus on our strategies and operations,
we continue to make progress in our merger with Chevron and expect to
complete the merger within the planned 12-month time frame."
Second Quarter Six Months
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Texaco Inc. (Millions of dollars): 2001 2000 2001 2000
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Income before special items $ 817 $ 641 $1,653 $1,243
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Write-downs of assets (25) - (25) -
Net gains (losses) on major asset sales - 2 - (65)
Tax issue - - - 46
Litigation issue - (4) - (17)
Net loss on Erskine pipeline - (14) - (14)
Employee related issues - - - 6
Merger Costs (8) - (11) -
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Special items (33) (16) (36) (44)
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Net income $ 784 $ 625 $1,617 $1,199
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Details on special items are included in the following segment
information.
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OPERATING RESULTS
EXPLORATION AND PRODUCTION
Second Quarter Six Months
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United States (Millions of dollars): 2001 2000 2001 2000
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Operating income before special items $ 411 $ 393 $1,000 $ 754
Special items - (40) - (107)
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Total operating income $ 411 $ 353 $1,000 $ 647
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U.S. Exploration and Production earnings for this year's second
quarter and first six months exceeded last year due to higher natural
gas prices. Market conditions early in the year kept natural gas
prices above last year's levels, while crude oil prices receded
slightly. U.S. natural gas prices declined in the second quarter from
first quarter historic levels as demand softened and storage
injections from April into July improved inventory levels. Texaco's
average realized natural gas prices for the second quarter and six
months 2001 were $4.48 and $5.86 per thousand cubic feet, 37 percent
and 105 percent higher than last year. For the second quarter and
first six months 2001, Texaco's realized crude oil prices were $22.51
and $23.42 per barrel, ten percent and five percent lower than last
year.
Daily production decreased ten percent for the second quarter to
531,000 barrels of oil equivalent per day (BOEPD) and 11 percent for
the first six months to 533,000 BOEPD. More than 40 percent of this
expected reduction in the second quarter and almost half for six
months was due to last year's sales of non-core producing properties.
The balance of the decrease was due to natural field declines and
lower production in our California fields as we economically reduced
steam production due to high natural gas prices.
Operating expenses increased for the second quarter and for the
first six months as higher natural gas prices led to significantly
higher utilities expenses and production taxes. Exploratory expenses
for the second quarter were $17 million before tax, $5 million lower
than last year. Exploratory expenses for six months 2001 were $49
million before tax, $8 million higher than last year.
Results for the first six months of 2000 included a special charge
of $107 million, including $40 million in the second quarter, for net
losses on sales of non-core producing assets.
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Second Quarter Six Months
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International (Millions of dollars): 2001 2000 2001 2000
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Operating income before special items $ 262 $ 195 $ 505 $ 488
Special items - 66 - 66
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Total operating income $ 262 $ 261 $ 505 $ 554
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International Exploration and Production operating results for the
second quarter 2001 were higher than last year due to higher natural
gas prices, increased production volumes and lower operating expenses.
Earnings for the first six months of 2001 were slightly higher than
last year due to higher natural gas prices and lower operating
expenses. Texaco's average realized natural gas prices for the second
quarter and six months 2001 were $1.78 and $1.90 per thousand cubic
feet, 24 percent and 30 percent higher than last year. Average
realized crude oil prices were $22.58 per barrel for the second
quarter and $22.10 per barrel for six months, four percent and six
percent below last year.
Daily production increased four percent for the second quarter
from last year to 532,000 BOEPD and was flat for the first six months
at 548,000 BOEPD. Production from our ongoing operations increased
nine percent for the second quarter and six percent for six months,
mainly in the North Sea, the Partitioned Neutral Zone and in Latin
America. Partly offsetting this increase were the sales of non-core
producing properties last year which caused a decrease in production
of five percent for the second quarter and six percent for the six
months.
Operating expenses decreased three percent in the second quarter
and 13 percent for six months due to the sale of non-core producing
properties. Exploratory expenses for the second quarter were $46
million before tax, $8 million higher than last year. Exploratory
expenses for the first six months were $63 million before tax, $9
million lower than last year.
Results for the second quarter of 2000 included a special benefit
of $80 million for net gains on the sale of non-core producing
properties and a special charge of $14 million for net losses
resulting from the Erskine pipeline interruption in the U.K. North
Sea.
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REFINING, MARKETING AND DISTRIBUTION
Second Quarter Six Months
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United States (Millions of dollars): 2001 2000 2001 2000
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Operating income before special items $ 196 $ 80 $ 234 $ 93
Special items - (35) - (30)
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Total operating income $ 196 $ 45 $ 234 $ 63
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U.S. Refining, Marketing and Distribution earnings improved
dramatically as compared with last year for both the second quarter
and first six months.
Motiva's earnings for the second quarter and first six months of
2001 benefited from significantly improved refining margins and high
refinery run rates in an environment of tight supplies and industry
refinery maintenance. In marketing, margins improved materially in the
second quarter and results were slightly higher for the year.
During the second quarter and first six months of 2001, Equilon's
earnings improved due to substantially higher refining margins and
improved refinery operations. Maintenance activity in 2001 decreased
from 2000 levels. Earnings also benefited from higher lubricant
margins, strong trading results and higher utilization of proprietary
pipelines. These improvements were reduced by extremely high West
Coast utilities expense. Marketing earnings for Equilon declined from
last year due to depressed fuel marketing margins as pump prices
lagged increases in supply costs in a very competitive market. This
was especially true in the Los Angeles area where retail fuel margins
were under intense pressure. Marketing margins began to strengthen
significantly in mid-May and remained strong for the rest of the
quarter.
Results for the first six months of 2000 included a second quarter
special charge of $31 million for the loss on the sale of the Wood
River refinery, a charge for a patent litigation issue of $17 million,
$4 million in the second quarter, and a first quarter gain of $18
million for an employee benefits revision.
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Second Quarter Six Months
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International (Millions of dollars): 2001 2000 2001 2000
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Operating income before special items $ 62 $ 90 $ 150 $ 153
Special items - - - (12)
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Total operating income $ 62 $ 90 $ 150 $ 141
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International Refining and Marketing earnings for the second
quarter of 2001 declined from last year. Operating results decreased
significantly in Europe due to weak U.K. marketing margins, which were
depressed by our inability to recover higher supply costs in the
marketplace. European refining earnings were comparable with last
year. In the Asia Pacific area, lower refining margins and trading
results negatively impacted earnings. Overall results in Latin America
were in line with last year, with improved refining earnings but lower
marketing results.
Results for the first six months of 2001 declined slightly.
European earnings decreased substantially from weak markets,
particularly in the U.K. The inability to recover increased supply
costs in the marketplace resulted in depressed marketing margins.
Lower sales volumes and unscheduled maintenance negatively impacted
refining results. Earnings increased in the Asia Pacific area from
improved marketing margins and higher trading results. Operations in
Latin America improved with higher refining margins in Panama.
However, lower sales volumes and the weakening of the local currency
in Brazil caused marketing results to decline.
Results for the first six months of 2000 included a special charge
of $12 million for employee separation costs.
GLOBAL GAS, POWER AND ENERGY TECHNOLOGY
Second Quarter Six Months
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(Millions of dollars): 2001 2000 2001 2000
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Operating income before special items $ 18 $ - $ 23 $ 20
Special items - - - -
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Total operating income $ 18 $ - $ 23 $ 20
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During the second quarter and the first six months of 2001,
operating results benefited from improved natural gas margins, sales
of services which assist customers in managing risk, and expanded
storage and transportation activities. Results also benefited from
power projects in Indonesia and Thailand. Operating results were
negatively impacted by expenses for a new gasification project in
Singapore and higher fuel expense for the cogeneration facilities.
OTHER BUSINESS UNITS
Second Quarter Six Months
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(Millions of dollars): 2001 2000 2001 2000
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Operating loss before special items $ (9) $ (2) $ (12) $ (2)
Special items (25) - (25) -
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Total operating loss $ (34) $ (2) $ (37) $ (2)
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Results before special items were lower than last year due to
higher costs associated with E-Business activities.
Results for the second quarter of 2001 included a special charge
of $25 million for write-downs associated with selected E-Business
investments, including our investment in PetroCosm, a procurement
marketplace, which ceased operations.
CORPORATE/NON-OPERATING RESULTS
Second Quarter Six Months
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(Millions of dollars): 2001 2000 2001 2000
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Results before special items $ (123) $ (115) $ (247) $ (263)
Special items (8) (7) (11) 39
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Total corporate/non-operating $ (131) $ (122) $ (258) $ (224)
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Corporate and non-operating results before special items improved
for the first six months of 2001 as a result of lower interest rates
and average debt levels, and lower overhead expenses. Corporate
expenses for the second quarter were slightly higher than the second
quarter of last year due to lower tax benefits on overhead and
interest.
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Results for the first six months of 2001 included a special charge
of $11 million, $8 million in the second quarter, for costs associated
with the proposed merger with Chevron. Results for 2000 included
special benefits of $46 million for favorable income tax settlements
and a second quarter special charge of $7 million for the early
extinguishment of debt.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures were $1,776 million for the
first six months of 2001 compared with $1,769 million for the same
period last year.
Led by a 30 percent increase in the United States, upstream
expenditures increased more than nine percent from 2000 levels.
Investment continued to focus on drilling and workover activity in New
Orleans and the Permian Basin. Internationally, development work
continued in the Hamaca heavy oil project in Venezuela, the Agbami
field offshore Nigeria and the Malampaya natural gas project in the
Philippines. In Kazakhstan, development work continued in Karachaganak
and in North Buzachi, where phase two appraisal drilling was recently
completed.
U.S. downstream expenditures were higher than last year as a
result of increased marketing development and refinery projects.
Internationally, spending slowed with lower marketing investments in
the Caribbean and Central America.
Global Gas, Power and Energy Technology spending for 2001 included
a 50 percent investment in the Sunrise Power Project which is jointly
owned with Edison International Company. Overall spending for Global
Gas, Power and Energy Technology decreased from last year due to the
completion of projects in Thailand and Singapore and the purchase of a
20 percent interest in Energy Conversion Devices, Inc., an alternate
energy technology company.
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CONTACTS: Paul Weeditz 914-253-7745
Keelin Molloy 914-253-7461
INVESTOR RELATIONS:
Elizabeth Smith 914-253-4478
Listen in live to Texaco's second quarter 2001 earnings discussion
with financial analysts on Wednesday, July 25th at 11:30 am EDT at:
http://www.webevents.broadcast.com/texaco/Q201earnings. For technical
assistance, call Sheila Lujan at 800-366-9831.
Note: This press release contains a number of forward-looking
statements within the meaning of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. In
particular, statements made concerning Texaco's expected
performance and financial results in future periods are based
upon Texaco's current expectations and beliefs and are subject
to a number of known and unknown risks and uncertainties that
could cause actual results to differ
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materially from those described in the forward-looking
statements. The following factors known to Texaco, among others,
could cause Texaco's actual results to differ materially from
those described in the forward-looking statements: decreased
demand for motor fuels, natural gas and other products;
worldwide and industry economic conditions; inaccurate forecasts
of crude oil, natural gas and petroleum product prices and
production; higher costs, expenses and interest rates; the
possibility that the merger with Chevron will not be
consummated; the possibility that the anticipated benefits from
the merger such as cost reductions will not be fully realized;
the process of, or conditions imposed in connection with,
obtaining regulatory approvals for the merger; etc. In addition,
you are encouraged to review Texaco's latest reports filed with
the SEC, including Texaco's Annual Report on Form 10-K filed
with the SEC on March 26, 2001, which describes a number of
additional risks and uncertainties that could cause actual
results to vary materially from those listed in the
forward-looking statements made in this press release.
The United States Securities and Exchange Commission permits oil
and gas companies, in their filings with the SEC, to disclose
only proved reserves that a company has demonstrated by actual
production or conclusive formation tests to be economically and
legally producible under existing economic and operating
conditions. Texaco uses certain terms in this press release,
such as estimated reserves, that the SEC's guidelines strictly
prohibit us from including in filings with the SEC. U.S.
Investors are urged to consider closely the Supplemental Oil and
Gas Information disclosure in our 2000 Annual Report on Form
10-K filed with the SEC on March 26, 2001, File No. 1-27,
available from us at:
Texaco Inc.
2000 Westchester Avenue
White Plains, NY 10650
Attention: Secretary
You may also obtain this form from the SEC by calling
1-800-SEC-0330.
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Income (loss) Second Quarter (a) Six Months (a)
(Millions of dollars) ------------------ --------------
2001 2000 2001 2000
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Exploration and production
United States $ 411 $ 353 $1,000 $ 647
International 262 261 505 554
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Total 673 614 1,505 1,201
Refining, marketing and distribution
United States 196 45 234 63
International 62 90 150 141
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Total 258 135 384 204
Global gas, power and energy
technology 18 - 23 20
Other business units (34) (2) (37) (2)
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Total operating segments 915 747 1,875 1,423
Corporate/Non-operating (131) (122) (258) (224)
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Net income $ 784 $ 625 $1,617 $1,199
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Net income per common share (dollars)
- diluted $1.44 $1.14 $ 2.97 $ 2.19
Average number of common shares
outstanding for computation of
earnings per share (millions)
- diluted 544.2 544.4 543.6 544.9
Provision for income taxes included
in net income $ 662 $ 404 $1,230 $ 767
<FN>
(a) Includes special items indicated in this release.
</FN>
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Other Financial Data Second Quarter Six Months
(Millions of dollars) -------------- ---------------
2001 2000 2001 2000
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Revenues $12,940 $12,069 $27,074 $23,340
Total assets as of June 30 $33,500(b) $29,754
Stockholders' equity as of
June 30 $14,350(b) $12,683
Total debt as of June 30 $ 7,350(b) $ 7,078
Capital and exploratory
expenditures
Exploration and production
United States $ 286 $ 209 $ 500 $ 384
International 461 526 878 879
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Total 747 735 1,378 1,263
Refining, marketing and
distribution
United States 88 71 151 136
International 70 41 122 141
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Total 158 112 273 277
Global gas, power and energy
technology 108 156 120 184
Other business units 2 42 5 45
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Total $ 1,015 $ 1,045 $ 1,776 $ 1,769
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Exploratory expenses
included above
United States $ 17 $ 22 $ 49 $ 41
International 46 38 63 72
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Total $ 63 $ 60 $ 112 $ 113
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Dividends paid to common
stockholders $ 244 $ 244 $ 487 $ 489
Dividends per common share
(dollars) $ .45 $ .45 $ .90 $ .90
Dividend requirements for
preferred stockholders $ 3 $ 4 $ 6 $ 7
<FN>
(b) Preliminary
</FN>
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Operating Data Second Quarter Six Months
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2001 2000 2001 2000
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Exploration and production
United States
Net production of crude oil and
natural gas liquids (MBPD) 325 364 325 371
Net production of natural gas
available for sale (MMCFPD) 1,237 1,349 1,246 1,355
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Total net production
(MBOEPD) 531 589 533 597
Natural gas sales (MMCFPD) 4,426 4,054 4,526 3,724
Average U.S. crude (per bbl.) $22.51 $24.90 $23.42 $24.67
Average U.S. natural gas
(per mcf) $ 4.48 $ 3.28 $ 5.86 $ 2.86
Average WTI (Spot) (per bbl.) $27.88 $28.97 $28.29 $28.94
Average Kern (Spot) (per bbl.) $21.48 $23.17 $20.69 $23.00
International
Net production of crude oil
and natural gas liquids (MBPD)
Europe 112 98 116 120
Indonesia 123 124 128 124
Partitioned Neutral Zone 147 136 147 135
Other 50 64 52 68
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Total 432 422 443 447
Net production of natural gas
available for sale (MMCFPD)
Europe 200 205 233 248
Colombia 210 188 206 197
Other 192 145 190 148
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Total 602 538 629 593
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Total net production
(MBOEPD) 532 512 548 546
Natural gas sales (MMCFPD) 618 567 645 626
Average International crude
(per bbl.) $22.58 $23.64 $22.10 $23.47
Average International natural
gas (per mcf) $ 1.78 $ 1.44 $ 1.90 $ 1.46
Average U.K. natural gas
(per mcf) $ 2.84 $ 2.27 $ 3.24 $ 2.32
Average Colombia natural gas
(per mcf) $ 1.47 $ 1.12 $ 1.44 $ 1.03
Total worldwide net production
(MBOEPD) 1,063 1,101 1,081 1,143
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Operating Data Second Quarter Six Months
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2001 2000 2001 2000
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Refining, marketing and distribution
United States
Refinery input (MBPD)
Equilon area 202 295 200 286
Motiva area 317 279 313 270
----- ----- ----- -----
Total 519 574 513 556
Refined product sales (MBPD)
Equilon area 700 760 676 725
Motiva area 450 365 434 353
Other 361 344 367 318
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Total 1,511 1,469 1,477 1,396
International
Refinery input (MBPD)
Europe 376 385 371 375
Caltex area 356 361 361 354
Latin America/West Africa 74 64 70 58
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Total 806 810 802 787
Refined product sales (MBPD)
Europe 687 616 671 626
Caltex area 517 530 520 588
Latin America/West Africa 474 466 487 457
Other 209 91 196 92
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Total 1,887 1,703 1,874 1,763