EXHIBIT 99.1
TEXACO REPORTS RESULTS:
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FIRST QUARTER 1998 EARNINGS TOTAL $259 MILLION
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FOR IMMEDIATE RELEASE: THURSDAY, APRIL 23, 1998.
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WHITE PLAINS, N.Y., April 23 - Texaco's first quarter results were
marked by increases in production, improved downstream results and tight
controls on cash operating expenses. However, these positive factors could not
overcome the decline in worldwide crude oil and natural gas prices, Texaco
Chairman and Chief Executive Officer Peter Bijur reported today.
Texaco's total reported net income for the first quarter of 1998 was
$259 million ($.46 per share). This compares with net income for the first
quarter of 1997 of $492 million ($.90 per share), after excluding a special
item. Total reported net income for the first quarter of 1997, which included a
special benefit of $488 million associated with a tax settlement, was $980
million ($1.80 per share). Commenting on the first quarter of 1998, Bijur
highlighted the following:
o Worldwide daily production rose 16 percent;
o Cash operating expenses per barrel dropped more than five
percent, aided by lower energy costs and higher volumes;
o Capital and exploratory expenditures grew 21 percent; and
o Equilon Enterprises LLC, a joint venture combining Texaco's and
Shell's western and midwestern U.S. downstream assets, began
commercial operations.
Commenting on the results Bijur stated, "Operationally, we experienced
a very good first quarter. Production increases were on target toward achieving
our planned double-digit growth for the year, however, total earnings were
significantly impacted by the drop in worldwide crude oil and natural gas
prices."
In worldwide upstream operations, Bijur reported that the first quarter
of 1998 included a full quarter of production from the Captain and Erskine
fields, both in the U.K. North Sea. Production increased in the Partitioned
Neutral Zone (between Saudi Arabia and Kuwait), Colombia, and in the U.S. as a
result of the November 1997 acquisition of Monterey Resources. He added that
first
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quarter production included the recently acquired 20 percent interest in the
Karachaganak field in Kazakhstan.
"Earnings in our worldwide downstream operations benefited from higher
gasoline sales volumes and higher margins. In the U.S., margins improved over
last year's depressed levels but weakened during the quarter due to oversupply,"
Bijur reported. He also commented on the continuing transformation of Texaco's
downstream businesses through strategic alliances. He noted that Equilon
Enterprises LLC, Texaco's U.S. downstream alliance with Shell Oil Company,
recently began operations and agreements are being finalized by Texaco, Shell
and Saudi Refining, Inc. for a separate joint venture involving the Eastern and
Gulf Coast refining and marketing businesses.
ANALYSIS OF OPERATING EARNINGS
EXPLORATION AND PRODUCTION
UNITED STATES
First quarter 1998 earnings were $107 million, compared to $311 million
for the first quarter of 1997. The decline was a result of lower crude oil and
natural gas prices. Average realized crude oil prices were $11.78 per barrel,
$7.84 below 1997. Crude oil prices have plummeted due to rising oil stocks and
slowing of world demand growth. Average natural gas prices were $2.14 per
thousand cubic feet (MCF), $.52 below 1997. Prices for natural gas decreased due
to mild weather as well as increased inventory levels.
Production increased more than 12 percent, however, earnings did not
significantly benefit from this increase due to low heavy crude oil prices.
Higher volumes included production from the acquired Monterey properties and
continued development of natural gas opportunities in Texas and Louisiana.
Texaco continued to aggressively pursue producing opportunities in the
Gulf of Mexico leading to higher exploration expenses this year. Exploration
expenses for the first quarter were $96 million before tax versus $42 million
last year. Operationally, cash operating expenses on a per barrel basis were
lower than the first quarter of 1997.
INTERNATIONAL
First quarter 1998 earnings were $40 million, compared to $156 million
for the first quarter of 1997. The decline in earnings was the result of lower
crude oil prices. Average realized crude oil prices were $11.95 per barrel for
the quarter, $7.53 below 1997. At these depressed prices, earnings did not
significantly benefit from a daily production increase of 20 percent. The
increase was from a full quarter of Captain and Erskine production in 1998, both
of which are in the U.K. North Sea. Production also increased in the Partitioned
Neutral Zone and Colombia, and as a result of our recently acquired 20 percent
interest in the Karachaganak field in Kazakhstan.
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Operating results for the first quarter 1998 included a non-cash
currency charge of $4 million related to deferred income taxes denominated in
British pounds. This compares to a benefit of $19 million for the first quarter
of 1997.
MANUFACTURING, MARKETING AND DISTRIBUTION
UNITED STATES
First quarter 1998 earnings were $47 million and include results from
the recently formed Equilon Enterprises LLC, Texaco's downstream alliance with
Shell Oil Company. Earnings for the first quarter of 1997 were $6 million.
Earnings in 1998 included the impact of overall lower crude costs that
temporarily improved margins. However, weather conditions weakened demand for
heating oil and West Coast gasoline. Gasoline prices, adjusted for inflation,
hit their lowest levels in 25 years. Additionally, refinery results included
scheduled downtime at several plants within our system.
Earnings for 1997 included the adverse effects of intense competition
that squeezed margins in the West Coast marketplace. Refinery fires late in 1996
and early in 1997 negatively affected product yields and caused casualty loss
expenses during 1997.
INTERNATIONAL
First quarter 1998 earnings were $182 million, compared to $104 million
for the first quarter of 1997. The international refining and marketing
businesses in Europe, Latin America and Texaco's affiliate Caltex, reported
higher 1998 earnings.
Refining operations in Europe and Latin America experienced improved
margins from lower crude costs in 1998. Improved European marketing results were
due to increased sales volumes and higher retail margins primarily in the United
Kingdom. The recovery from the 1997 Scandinavian price war also contributed to
the higher earnings. Improved margins and higher sales volumes in Central
America, the Caribbean, and Brazil drove stronger marketing results in Latin
America.
In the Caltex area, margins in Korea improved due to decreased crude
costs and partial recovery of local fourth quarter 1997 currency losses. The
Caltex area also experienced a modest increase in refined product sales volumes.
Although inland sales volumes were lower due to the economic crisis in Southeast
Asia, higher trading volumes led to the overall volume improvement. Included in
1998 earnings were unfavorable net currency-related effects of $16 million;
primarily tax charges on local currency gains on U.S. obligations resulting from
the strengthening of the Korean won. Last year's results included Korean
currency losses of $21 million.
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Results for 1998 included a non-cash currency charge of $3 million for
the first quarter related to deferred income taxes denominated in British
pounds. This compares to a benefit of $5 million for the first quarter of 1997.
CORPORATE/NONOPERATING RESULTS
Corporate and nonoperating results for the first quarter of 1998 were
charges of $119 million, compared to $97 million for the first quarter of 1997,
excluding special items. The change was due principally to increased interest
expense on higher debt levels and Texaco's corporate advertising campaign
introduced in the second half of 1997.
Results for 1997 included a first quarter special benefit of $48
million associated with an IRS settlement.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures were $967 million for the first
quarter of 1998, compared to $799 million for the same period in 1997.
In the United States upstream, offshore development continued in the
deepwater Gulf of Mexico where Texaco holds a strong lease-acreage position.
Work continued during the quarter on the fabrication and installation of the
Petronius compliant tower. Also, subsea development work moved forward on the
Gemini field, a major gas reserve with production expected during 1999.
Expenditures in 1998 increased for enhanced oil recovery projects using advanced
thermal recovery techniques to increase production from the acquired Monterey
properties and other core producing fields. Exploratory expenses in the United
States increased as we aggressively pursued our program to grow oil and gas
production and reserves.
Internationally, higher upstream expenditures include our investment in
discovered reserve opportunities, such as the Karachaganak venture. Development
work continued in the U.K. North Sea, Indonesia and other promising areas.
In the downstream operations, through domestic and international
alliances and subsidiaries, Texaco continues to invest in projects that enhance
brand loyalty and increase market share.
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MEDIA CONTACTS:
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Chris Gidez 914-253-4042 Faye Cox 914-253-7745
Ken Sniffen 914-253-4114 Kelly McAndrew 914-253-6295
Keelin Molloy 914-253-7461
INVESTOR RELATIONS: Elizabeth Smith 914-253-4478
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Listen in live to Texaco's first quarter 1998 earnings discussion with financial
analyst community at
http://www.events.audionet.com/events/texaco/q1earnings/
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For technical assistance, call Sheila Lujan at 800-366-9831
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First Quarter
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1998 1997 (a)
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FUNCTIONAL NET INCOME ($Millions)
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Operating Earnings
Petroleum and natural gas
Exploration and production
United States $ 107 $ 311
International 40 156
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Total 147 467
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Manufacturing, marketing and
Distribution
United States 47 6
International 182 104
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Total 229 110
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Total petroleum and natural gas 376 577
Nonpetroleum 2 12
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Total operating earnings 378 589
Corporate/Nonoperating (119) 391
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Total net income $ 259 $ 980
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Net income per common share (Dollars)
Basic $ .46 $ 1.86
Diluted $ .46 $ 1.80
Average number of common shares
outstanding for computation
of earnings per share (Millions)
Basic 531.9 519.3
Diluted 551.4 540.1
Provision for (benefit from) income taxes
included in total net income above $ 140 $ (194)
<FN>
(a) Includes special item in Corporate/Nonoperating as indicated in this release.
</FN>
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First Quarter
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1998 1997
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OTHER FINANCIAL DATA ($Millions)
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Revenues $ 8,147 $12,029
Total assets as of March 31 $28,900 $27,008
Stockholders' equity as of March 31 $12,700 $11,062
Total debt as of March 31 $ 6,800 $ 5,495
Capital and exploratory expenditures
Exploration and production
United States $ 476 $ 352
International 290 282
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Total 766 634
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Manufacturing, marketing and
Distribution
United States 88 60
International 99 101
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Total 187 161
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Other 14 4
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Total $ 967 $ 799
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Exploratory expenses included above
United States $ 96 $ 42
International 45 57
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Total $ 141 $ 99
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Dividends paid to common stockholders $ 239 $ 221
Dividends per common share (Dollars) $ .45 $ .425
Dividend requirements for preferred stockholders $ 14 $ 14
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First Quarter
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1998 1997
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OPERATING DATA
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Exploration and Production
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United States
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Net production of crude oil and
natural gas liquids (MBPD) 452 384
Net production of natural gas -
available for sale (MMCFPD) 1,738 1,656
Total net production (MBOEPD) 742 660
Natural gas sales (MMCFPD) 3,882 3,841
Average U.S. crude (per bbl.) $ 11.78 $ 19.62
Average U.S. natural gas (per mcf) $ 2.14 $ 2.66
Average WTI (Spot) (per bbl.) $ 15.92 $ 22.76
Average Kern (Spot) (per bbl.) $ 8.89 $ 15.98
International
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Net production of crude oil and
Natural gas liquids (MBPD)
Europe 158 114
Indonesia 155 140
Partitioned Neutral Zone 108 90
Other 70 69
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Total 491 413
Net production of natural gas
Available for sale (MMCFPD)
Europe 258 241
Colombia 208 132
Other 123 102
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Total 589 475
Total net production (MBOEPD) 589 492
Natural gas sales (MMCFPD) 777 620
Average International crude (per bbl.) $ 11.95 $ 19.48
Average U.K. natural gas (per mcf) $ 2.65 $ 2.85
Average Colombia natural gas (per mcf) $ .91 $ 1.05
Worldwide
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Total worldwide net production (MBOEPD) 1,331 1,152
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First Quarter
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1998 1997
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OPERATING DATA
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Manufacturing, Marketing and Distribution
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United States
Refinery input (MBPD)
Western U.S. 358 409
Eastern U.S. 313 336
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Total 671 745
Refined product sales (MBPD)
Gasoline 492 497
Avjets 163 89
Middle Distillates 180 214
Residuals 96 85
Other 120 120
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Total 1,051 1,005
International
Refinery input (MBPD)
Europe 374 348
Affiliate - Caltex 437 407
Latin America/West Africa 57 62
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Total 868 817
Refined product sales (MBPD)
Europe 564 495
Affiliate - Caltex 593 586
Latin America/West Africa 428 366
Other 49 44
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Total 1,634 1,491