Exhibit 99.1
Unocal Corporation
2141 Rosecrans Avenue, Suite 4000
El Segundo, California 90245
UNOCAL 76 LOGO
NEWS RELEASE
Contact: Barry Lane (Media)
310-726-7731
Robert Wright (Investors)
310-726-7665
Unocal 2Q 2003 net earnings up 55% from year earlier on higher prices
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El Segundo, Calif. July 29, 2003 - Unocal Corporation (NYSE: UCL) today
reported net earnings in the second quarter of $177 million, or 68 cents per
share (diluted). This compares with net earnings of $114 million, or 46 cents
per share (diluted), in the same period a year ago and $134 million, or 52 cents
per share (diluted), in the first quarter 2003.
Unocal's adjusted after-tax earnings for the second quarter 2003 were
$191 million, or 73 cents per share (diluted). This compares with the
Thomson/First Call consensus (published July 28, 2003) of 69 cents per share.
Unocal's adjusted after-tax earnings were $134 million, or 55 cents per share
(diluted), in the second quarter 2002 and $229 million, or 87 cents per share,
in the first quarter 2003. Adjusted after-tax earnings are net earnings
excluding special items, earnings from discontinued operations and cumulative
effects of accounting changes. All of the special items are detailed in the
Adjusted After-tax Earnings table.
CONSOLIDATED RESULTS (UNAUDITED) 2Q 1Q 2Q
------------------------------
Millions of dollars except per share amounts 2003 2003 2002
- --------------------------------------------------------------------------------
Earnings from continuing operations $ 169 $ 217 $ 113
Earnings from discontinued operations 8 - 1
Cumulative effects of accounting changes - (83) -
- --------------------------------------------------------------------------------
Net earnings 177 134 114
- --------------------------------------------------------------------------------
Less: Earnings from discontinued operations 8 - 1
Less: Cumulative effects of accounting changes - (83) -
Less: Special items (22) (12) (21)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings $ 191 $ 229 $ 134
================================================================================
DILUTED EARNINGS PER SHARE DATA (UNAUDITED)
Net earnings per share:
Continuing operations $0.65 $0.82 $0.46
Discontinued operations 0.03 - -
Cumulative effects of accounting changes - (0.30) -
- --------------------------------------------------------------------------------
Total net earnings per share $0.68 $0.52 $0.46
- --------------------------------------------------------------------------------
Adjusted after-tax earnings per share $0.73 $0.87 $0.55
- --------------------------------------------------------------------------------
REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $1,620 $1,789 $1,368
================================================================================
-2-
Second quarter earnings factors
- -------------------------------
Unocal's second quarter 2003 adjusted after-tax earnings (compared with
2Q 2002) reflected higher natural gas prices, increased liquids prices and
higher international liquids and natural gas production.
The largest contributor to the higher international production was
Thailand, where oil-equivalent production was up 10 percent from last year's
second quarter. Crude oil and condensate production increased 29 percent,
primarily because of de-bottlenecking production from the Yala-Plamuk oil
project and higher condensate production from the Pailin Phase 2 project.
Quarterly natural gas production increased 5 percent from last year due to
increased demand tied to higher electric power needs and reduced volumes from
other suppliers. Unocal functions as the "swing producer" in Thailand, providing
above-contract minimum volumes when required to meet Thailand's needs. Unocal
has routinely produced more than its contract minimums. In early July, Unocal
set a new one-day gross production record of 1.36 billion cubic feet, compared
with the contract minimum of 1.07 billion. Higher production from Azerbaijan and
Bangladesh also contributed to increased international production.
These positive factors were offset partially by lower North America
liquids and natural gas production and higher exploratory land provisions.
The primary reasons for lower North American production in the second
quarter were natural declines and decreased drilling activity. The lower North
American production also reflected asset dispositions in the first six months of
the year, which accounted for decreases of more than 5,000 barrels of
oil-equivalent (BOE) per day.
Higher exploratory land provisions of $26 million pretax resulted from
Unocal's relinquishment of about 45 deepwater Gulf of Mexico blocks before their
expiration dates. This reflected the decision to focus its deepwater Gulf of
Mexico land position on those OCS blocks that have the best potential.
Second-quarter total revenues were $1.62 billion, up from $1.37 billion
in the second quarter 2002, primarily due to higher commodity prices for natural
gas and liquids.
Administrative and general expense in the second quarter included a $27
million pretax charge as a result of the restructuring program announced in June
that is aimed at strengthening Unocal's Lower 48 businesses, realigning its
corporate staff and shared resource groups, and improving its balance sheet (see
special items detailed in the Adjusted After-tax Earnings table). The higher A&G
expense also reflected increased pension-related expenses.
Unocal's EBITDAX for the second quarter 2003 was $720 million, or $2.65
per share (diluted). This compares with $634 million, or $2.58 per share
(diluted), for the same period in 2002. EBITDAX is net earnings before interest,
taxes, depreciation, depletion and amortization, asset impairments, exploration
expenses, dry hole costs, special items, earnings from
-3-
discontinued operations and cumulative effects of accounting changes. EBITDAX is
commonly used by investors and analysts to facilitate comparison of companies
like Unocal that use the "successful efforts" accounting method with other
exploration and production companies that use the "full-cost" method.
Worldwide, Unocal's consolidated net daily production in the second
quarter 2003 averaged 463,000 BOE per day, compared with 486,000 BOE per day a
year ago.
Unocal's worldwide average liquids price, including hedging, was $25.36
per barrel, up from $23.25 in the second quarter 2002. The company's average
worldwide realized price for natural gas, including hedging, was $3.53 per
thousand cubic feet (mcf), compared with $2.87 per mcf a year ago. Hedging
activities in the second quarter lowered worldwide liquids realizations by 4
cents per barrel and natural gas realizations by 7 cents per thousand cubic
feet.
Six-months results
- ------------------
Net earnings for the first six months of 2003 were $311 million, or $1.20
per share (diluted). This compares with $136 million, or 55 cents per share
(diluted) for the same period a year ago.
Unocal's adjusted after-tax earnings for the first six months were $420
million, or $1.60 per share (diluted). This compares with $177 million, or 72
cents per share, for the first six months of 2002. The special items are
detailed in the Adjusted After-tax Earnings table included with this news
release.
Total revenues for the year-to-date were $3.41 billion, up from $2.42
billion last year.
For the Six Months
CONSOLIDATED RESULTS (UNAUDITED) Ended June 30,
--------------------
Millions of dollars except per share amounts 2003 2002
- --------------------------------------------------------------------------------
Earnings from continuing operations $ 386 $ 135
Earnings from discontinued operations 8 1
Cumulative effects of accounting changes (83) -
- --------------------------------------------------------------------------------
Net earnings 311 136
- --------------------------------------------------------------------------------
Less: Earnings from discontinued operations 8 1
Less: Cumulative effects of accounting changes (83) -
Less: Special items (34) (42)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings $ 420 $ 177
================================================================================
DILUTED EARNINGS PER SHARE DATA (UNAUDITED)
Net earnings per share:
Continuing operations $1.47 $0.55
Discontinued operations 0.03 -
Cumulative effects of accounting changes (0.30) -
- --------------------------------------------------------------------------------
Total net earnings per share $1.20 $0.55
- --------------------------------------------------------------------------------
Adjusted after-tax earnings per share $1.60 $0.72
- --------------------------------------------------------------------------------
REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $3,409 $2,417
================================================================================
Unocal's EBITDAX for the six months of 2003 was $1.55 billion, or $5.69
per share (diluted), compared with $1.09 billion, or $4.44 per share (diluted),
in 2002.
-4-
Financial condition
- -------------------
Cash flow from operating activities for the six months ended June 30,
2003, was $1.09 billion, compared with $626 million for the comparable period of
2002.
Capital spending was $917 million for the six months 2003, versus $830
Million in the same period a year ago.
Pretax proceeds from asset sales were $125 million in the second quarter,
bringing the total for the year to $191 million. Second quarter dispositions
included various oil and gas properties, as well as the sale of Unocal's
interest in Matador Petroleum (proceeds $80 million).
The company's total consolidated long-term debt (including current
maturities) was $3.0 billion at June 30, 2003, unchanged from year-end 2002.
Cash and cash-equivalents were $363 million at June 30, 2003, up from $168
million at December 31, 2002.
Proceeds from the sale of assets in 2003 will be used mainly to reduce
debt and other financings. As part of this program, Unocal paid off the $252
million limited partner interest in Spirit Energy Partners in July. This
financing would have been reclassified from minority interest to debt in the
third quarter due to a change in accounting rules.
Third quarter 2003 outlook
- --------------------------
For the third quarter 2003, Unocal is forecasting adjusted after-tax
earnings of 65 to 75 cents per share (diluted). This forecast compares with the
Thomson/First Call consensus (published July 28, 2003) of 64 cents per share
for the quarter. The third quarter forecast assumes average NYMEX benchmark
prices of $30.00 per barrel of crude oil and $4.95 per million British thermal
units (mmBtu) for North America natural gas for the period.
Unocal's third quarter adjusted after-tax earnings are expected to change
4 cents per share for every $1 change in its average worldwide realized price
for crude oil and 2 cents per share for every 10-cent change in its average
realized North America natural gas price, excluding the effect of hedging
activities. The forecast also assumes pretax dry hole costs in the third quarter
of $40 to $50 million.
The company's current estimate for third quarter 2003 production is
between 460,000 and 470,000 BOE per day.
Full-year 2003 outlook
- ----------------------
For the full-year 2003, Unocal is forecasting adjusted after-tax earnings
of $2.90 to $3.20 per share (diluted). This forecast compares with the
Thomson/First Call consensus (published July 28, 2003) of $2.74 per share for
the year. The full-year 2003 forecast assumes average NYMEX benchmark prices of
$30.40 per barrel of crude oil and $5.45 per mmBtu for North America natural
gas.
Unocal's full-year adjusted after-tax earnings are expected to change 14
cents per share for every $1 change in its average worldwide realized price for
crude oil and 7 cents per share
-5-
for every 10-cent change in its average realized North America natural gas
price, excluding the effect of hedging activities.
Unocal has hedges that result in fixed future prices for natural gas as follows:
o Third quarter 2003: 109 million MMBTU per day at $5.87
o Fourth quarter 2003: 172 million MMBTU per day at $5.99
o First quarter 2004: 264 million MMBTU per day at $6.07
The forecast also assumes pretax dry hole costs of $155 to $185 million
and that pretax pension-related expenses will increase over 2002 by
approximately $65 to $70 million.
The company's current estimate for full-year 2003 production is between
470,000 and 480,000 BOE per day. This estimate reflects the sale of Unocal's
interest in Matador Petroleum and a one-month delay in the start-up of the West
Seno field.
In June 2003, Unocal announced plans to sell certain E&P assets in the
Gulf of Mexico region that would reduce the size of the company's GOM shelf
business to approximately 30 fields. This program is designed to create a more
profitable and sustainable North American business that would complement
Unocal's high-growth international operations. The company believes that the
retained U.S. properties could yield additional production at lower finding and
development costs.
The sales could occur later this year and impact Unocal's net production
for 2003. The fields currently identified to be sold represent net daily
production of about 25,000 to 30,000 BOE.
Unocal's total actual production for the year could also be impacted by
cost recovery volume fluctuations under its various foreign production-sharing
contracts due to changes in commodity prices, changes in demand for gas in
Thailand and production and exploration performance in the Gulf of Mexico.
In addition to the anticipated sale of Gulf of Mexico properties, other
investments and non-E&P assets are expected to be sold, including rights to the
proposed Sarulla geothermal project in Indonesia, for which Unocal expects to
receive $60 million in September.
The third-quarter and full-year adjusted after-tax earnings forecasts
exclude special items. Because of the inherent uncertainty related to special
items, determining whether or when they will occur and quantifying their dollar
impact, Unocal does not forecast net earnings.
About Unocal Corporation
- ------------------------
Unocal is one of the world's leading independent natural gas and crude
oil exploration and production companies. The company's principal oil and gas
activities are in North America and Asia.
Conference call/financial database
- ----------------------------------
Unocal will webcast its quarterly earnings conference call Wednesday,
July 30, at 9 a.m.
-6-
PDT (12 noon. EDT) over the Internet. To listen to the live webcast, go to the
Investor Information section of the Unocal web site, www.unocal.com. Replays of
the conference call, including questions and answers, will be available.
Complete detailed financial tables for the second quarter 2003 and the
comparable prior periods are available in the "Quarterly Fact Book," which is
posted in the Data Warehouse in the Investor Information section of the
company's web site. The Quarterly Fact Book is also available upon request from
Unocal Investor Relations.
* * * * *
This news release contains certain forward-looking statements about expected
adjusted after-tax earnings, production rates, commodity prices, dry hole costs,
divestitures and pension costs. These statements are not guarantees of future
performance. The statements are based upon Unocal'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 materially from those described in the
forward-looking statements. Actual results could differ materially as a result
of changes in commodity prices; the levels of the company's oil and gas
production; the extent of the company's operating cash flow and other capital
resources available to fund its capital expenditures; regulatory, geological,
operating and economic considerations; and other factors discussed in Unocal's
2002 Annual Report on Form 10-K and subsequent reports filed with the U.S.
Securities and Exchange Commission. Unocal undertakes no obligation to update
the information in this news release.
Investors are urged to consider closely the disclosure in Unocal's 2002 Annual
Report on Form 10-K and other reports filed with the SEC (SEC File No. 1-8483).
Copies of the company's SEC filings are available from the company by calling
800-252-2233 or from the SEC by calling 800-SEC-0330. The reports are also
available on the Unocal web site, www.unocal.com.
* * * * *
-7-
CONSOLIDATED EARNINGS (UNAUDITED) For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------------------------
Millions of dollars except
per share amounts 2003 2002 2003 2002
- --------------------------------------------------------------------------------
Revenues
Sales and operating revenues $ 1,564 $ 1,361 $ 3,339 $ 2,396
Interest, dividends and
miscellaneous income (loss) 9 8 20 20
Gain (loss) on sales of assets 47 (1) 50 1
- --------------------------------------------------------------------------------
Total revenues 1,620 1,368 3,409 2,417
Costs and other deductions
Crude oil, natural gas
and product purchases 536 428 1,182 723
Operating expense 325 324 619 623
Administrative and general expense 87 37 138 80
Depreciation, depletion and amortization 255 255 515 479
Asset impairments 3 21 3 21
Dry hole costs 10 13 81 41
Exploration expense 88 61 143 120
Interest expense 36 43 74 94
Property and other operating taxes 21 18 43 34
Distributions on convertible preferred
securities of subsidiary trust 8 8 16 16
- --------------------------------------------------------------------------------
Total costs and other deductions 1,369 1,208 2,814 2,231
Earnings from equity investments 53 51 96 88
- --------------------------------------------------------------------------------
Earnings from continuing operations before
income taxes and minority interests 304 211 691 274
- --------------------------------------------------------------------------------
Income taxes 133 95 301 135
Minority interests 2 3 4 4
- --------------------------------------------------------------------------------
Earnings from continuing operations 169 113 386 135
- --------------------------------------------------------------------------------
Earnings from discontinued operations 8 1 8 1
Cumulative effects of accounting changes (a) - - (83) -
- --------------------------------------------------------------------------------
Net earnings $ 177 $ 114 $ 311 $ 136
================================================================================
Basic earnings per share of common stock (b)
Continuing operations $ 0.66 $ 0.46 $ 1.50 $ 0.55
Net earnings $ 0.69 $ 0.46 $ 1.21 $ 0.55
Diluted earnings per share of common stock (c)
Continuing operations $ 0.65 $ 0.46 $ 1.47 $ 0.55
Net earnings $ 0.68 $ 0.46 $ 1.20 $ 0.55
Cash dividends declared per share
of common stock $ 0.20 $ 0.20 $ 0.40 $ 0.40
- --------------------------------------------------------------------------------
<FN>
(a) Net of tax (benefit) $ - $ - $ (48) $ -
(b) Basic weighted average shares
outstanding (in thousands) 258,202 244,639 258,103 244,423
(c) Diluted weighted average shares
outstanding (in thousands) 272,108 245,865 271,907 245,531
</FN>
-8-
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) At June 30, At December 31,
Millions of dollars 2003 2002
- --------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 363 $ 168
Other current assets - net 1,253 1,207
Investments and long-term receivables - net 1,074 1,044
Properties - net 8,327 7,879
Goodwill 129 122
Other assets 390 340
- --------------------------------------------------------------------------------
Total assets $ 11,536 $ 10,760
================================================================================
Liabilities and Stockholders' Equity
Current liabilities (a) $ 1,895 $ 1,632
Long-term debt and capital leases 2,744 3,002
Deferred income taxes 677 593
Accrued abandonment, restoration
and environmental liabilities 917 622
Other deferred credits and liabilities 860 816
Minority interests 276 275
Convertible preferred securities
of a subsidiary trust 522 522
Stockholders' equity 3,645 3,298
- --------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 11,536 $ 10,760
================================================================================
<FN>
(a) Includes current portion of LTD of: 232 6
</FN>
-9-
CONSOLIDATED CASH FLOWS (UNAUDITED) For the Six Months
Ended June 30,
---------------------------
Millions of dollars 2003 2002
- --------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net earnings $ 311 $ 136
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation, depletion and amortization 515 479
Asset impairments 3 21
Dry hole costs 81 41
Amortization of exploratory leasehold costs 71 45
Deferred income taxes 41 (17)
Gain on sales of assets (pre-tax) (50) (1)
Gain on disposal of discontinued operations (pre-tax) (13) (2)
Cumulative effects of accounting changes 83 -
Other 110 (40)
Working capital and other changes related to operations (67) (36)
- --------------------------------------------------------------------------------
Net cash provided by operating activities 1,085 626
- --------------------------------------------------------------------------------
Cash Flows from Investing Activities
Capital expenditures (includes dry hole costs) (917) (830)
Proceeds from sales of assets 191 45
Proceeds from sale of discontinued operations - 2
- --------------------------------------------------------------------------------
Net cash used in investing activities (726) (783)
- --------------------------------------------------------------------------------
Cash Flows from Financing Activities
Long-term borrowings 79 440
Reduction of long-term debt
and capital lease obligations (143) (229)
Minority interests (3) (4)
Proceeds from issuance of common stock 10 19
Dividends paid on common stock (103) (98)
Other (4) -
- --------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities (164) 128
- --------------------------------------------------------------------------------
Net increase in cash and cash equivalents 195 (29)
- --------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 168 190
- --------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 363 $ 161
================================================================================
-10-
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT
(UNAUDITED)
2nd Q 2003 1st Q 2003
-------------------------------------------------
Adjusted Adjusted
Net After-Tax Net After-Tax
Millions of dollars Earnings Earnings (a) Earnings Earnings (a)
- --------------------------------------------------------------------------------
Exploration & Production
North America
U.S. Lower 48 (b) $ 89 $ 70 $ 111 $ 111
Alaska 14 14 15 15
Canada 8 6 24 22
International
Far East 116 116 121 121
Other 29 29 21 21
Trade 4 4 (9) (9)
Midstream 18 18 18 18
Geothermal and Power Operations 7 7 12 12
Corporate and Other
Administrative and General (22) (22) (23) (23)
Interest Expense - Net (28) (28) (31) (31)
Environmental and Litigation (28) (2) (17) (3)
Other (a) (38) (21) (25) (25)
- --------------------------------------------------------------------------------
After-tax earnings (loss)
from continuing operations 169 191 217 229
After-tax earnings
from discontinued operations 8 - - -
Cumulative effects
of accounting changes - - (83) -
- --------------------------------------------------------------------------------
After-tax earnings (loss) $ 177 $ 191 $ 134 $ 229
================================================================================
<FN>
(a) For a reconciliation to net earnings, see the Adjusted After-Tax
Earnings table.
(b) Includes earnings (loss) from:
Onshore / Shelf 118 99 142 142
Deep water (29) (29) (31) (31)
</FN>
-11-
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT
(UNAUDITED)
2nd Q 2003 2nd Q 2002
-------------------------------------------------
Adjusted Adjusted
Net After-Tax Net After-Tax
Millions of dollars Earnings Earnings (a) Earnings Earnings (a)
- --------------------------------------------------------------------------------
Exploration & Production
North America
U.S. Lower 48 (b) $ 89 $ 70 $ 20 $ 32
Alaska 14 14 (5) (5)
Canada 8 6 6 2
International
Far East 116 116 113 113
Other 29 29 12 12
Trade 4 4 1 1
Midstream 18 18 23 23
Geothermal and Power Operations 7 7 14 14
Corporate and Other
Administrative and General (22) (22) (19) (19)
Interest Expense - Net (28) (28) (28) (28)
Environmental and Litigation (28) (2) (13) (2)
Other (a) (38) (21) (11) (9)
- --------------------------------------------------------------------------------
After-tax earnings (loss)
from continuing operations 169 191 113 134
After-tax earnings
from discontinued operations 8 - 1 -
- --------------------------------------------------------------------------------
After-tax earnings (loss) $ 177 $ 191 $ 114 $ 134
================================================================================
<FN>
(a) For a reconciliation to net earnings, see the Adjusted After-Tax
Earnings table.
(b) Includes earnings (loss) from:
Onshore / Shelf 118 99 29 41
Deep water (29) (29) (9) (9)
</FN>
-12-
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT
(UNAUDITED) For the Six Months
Ended June 30,
--------------------------------------------------
2003 2003 2002 2002
--------------------------------------------------
Adjusted Adjusted
Net After-Tax Net After-Tax
Millions of dollars Earnings Earnings (a) Earnings Earnings (a)
- --------------------------------------------------------------------------------
Exploration & Production
North America
U.S. Lower 48 (b) $ 200 $ 181 $ 24 $ 33
Alaska 29 29 (11) (11)
Canada 32 28 (3) (3)
International
Far East 237 237 203 203
Other 50 50 24 24
Trade (5) (5) 2 2
Midstream 36 36 42 42
Geothermal and Power Operations 19 19 20 20
Corporate and Other
Administrative and General (45) (45) (43) (43)
Interest Expense - Net (59) (59) (65) (65)
Environmental and Litigation (45) (5) (36) (3)
Other (a) (63) (46) (22) (22)
- --------------------------------------------------------------------------------
After-tax earnings (loss)
from continuing operations 386 420 135 177
After-tax earnings
from discontinued operations 8 - 1 -
Cumulative effects
of accounting changes (83) - - -
- --------------------------------------------------------------------------------
After-tax earnings (loss) $ 311 $ 420 $ 136 $ 177
================================================================================
<FN>
(a) For a reconciliation to net earnings, see the Adjusted After-Tax
Earnings table.
(b) Includes earnings (loss) from:
Onshore / Shelf 260 241 42 51
Deep water (60) (60) (18) (18)
</FN>
-13-
OPERATING HIGHLIGHTS For the Three Months For the Six Months
Ended June 30, Ended June 30,
-----------------------------------------
2003 2002 2003 2002
- --------------------------------------------------------------------------------
North America Net Daily Production
Liquids (thousand barrels)
U.S. Lower 48 (a) (b) 44 54 46 55
Alaska 23 25 22 25
Canada 17 17 17 18
- --------------------------------------------------------------------------------
Total liquids 84 96 85 98
Natural gas - dry basis (million cubic feet)
U.S. Lower 48 (a) (b) 652 766 678 754
Alaska 67 77 64 89
Canada 86 92 91 91
- --------------------------------------------------------------------------------
Total natural gas 805 935 833 934
North America Average Prices (excluding hedging activities) (c)
Liquids (per barrel)
U. S. Lower 48 $ 26.02 $ 23.49 $ 28.11 $ 20.95
Alaska $ 27.46 $ 24.74 $ 31.34 $ 21.99
Canada $ 23.52 $ 21.92 $ 26.05 $ 19.15
Average $ 25.93 $ 23.56 $ 28.48 $ 20.89
Natural gas (per mcf)
U. S. Lower 48 $ 5.01 $ 3.12 $ 5.66 $ 2.68
Alaska $ 1.20 $ 1.57 $ 1.20 $ 1.57
Canada $ 5.13 $ 3.03 $ 5.40 $ 2.54
Average $ 4.69 $ 2.98 $ 5.27 $ 2.55
- --------------------------------------------------------------------------------
North America Average Prices (including hedging activities) (c)
Liquids (per barrel)
U. S. Lower 48 $ 25.84 $ 23.48 $ 27.22 $ 21.01
Alaska $ 27.46 $ 24.74 $ 31.34 $ 21.99
Canada $ 23.52 $ 21.92 $ 26.05 $ 19.15
Average $ 25.84 $ 23.56 $ 27.99 $ 20.92
Natural gas (per mcf)
U. S. Lower 48 $ 4.86 $ 3.12 $ 5.23 $ 2.80
Alaska $ 1.20 $ 1.57 $ 1.20 $ 1.57
Canada $ 4.79 $ 2.97 $ 5.07 $ 2.62
Average $ 4.53 $ 2.97 $ 4.89 $ 2.66
- --------------------------------------------------------------------------------
<FN>
(a) Includes proportional interests in production of equity investees.
(b) Includes minority interests of :
Liquids 1 9 1 9
Natural gas 11 98 10 98
Barrels oil equivalent 3 25 2 25
(c) Excludes gains/losses on derivative positions not accounted for as hedges
and ineffective portions of hedges.
</FN>
-14-
OPERATING HIGHLIGHTS (CONTINUED) For the Three Months For the Six Months
Ended June 30, Ended June 30,
-----------------------------------------
2003 2002 2003 2002
- --------------------------------------------------------------------------------
International Net Daily Production (d)
Liquids (thousand barrels)
Far East 59 54 57 53
Other (a) 20 20 21 20
- --------------------------------------------------------------------------------
Total liquids 79 74 78 73
Natural gas - dry basis (million cubic feet)
Far East 911 883 890 852
Other (a) 89 79 100 78
- --------------------------------------------------------------------------------
Total natural gas 1,000 962 990 930
International Average Prices (e)
Liquids (per barrel)
Far East $ 24.78 $ 22.50 $ 27.06 $ 20.95
Other $ 25.16 $ 23.91 $ 27.11 $ 23.03
Average $ 24.90 $ 22.84 $ 27.07 $ 21.43
Natural gas (per mcf)
Far East $ 2.74 $ 2.78 $ 2.75 $ 2.70
Other $ 2.89 $ 2.79 $ 2.86 $ 2.64
Average $ 2.76 $ 2.78 $ 2.76 $ 2.69
- --------------------------------------------------------------------------------
Worldwide Net Daily Production (a) (b) (d)
Liquids (thousand barrels) 163 170 163 171
Natural gas-dry basis (million cubic feet) 1,805 1,897 1,823 1,864
Barrels oil equivalent (thousands) 463 486 467 482
Worldwide Average Prices (excluding hedging activities) (c)
Liquids (per barrel) $ 25.40 $ 23.26 $ 27.80 $ 21.11
Natural gas (per mcf) $ 3.60 $ 2.87 $ 3.88 $ 2.62
Worldwide Average Prices (including hedging activities) (c) (e)
Liquids (per barrel) $ 25.36 $ 23.25 $ 27.54 $ 21.13
Natural gas (per mcf) $ 3.53 $ 2.87 $ 3.71 $ 2.68
- --------------------------------------------------------------------------------
<FN>
(a) Includes proportional interests in production of equity investees.
(b) Includes minority interests of :
Liquids 1 9 1 9
Natural gas 11 98 10 98
Barrels oil equivalent 3 25 2 25
(c) Excludes gains/losses on derivative positions not accounted for as hedges
and ineffective portions of hedges.
(d) International production is presented utilizing
the economic interest method.
(e) International did not have any hedging activities.
</FN>
-15-
ADJUSTED AFTER-TAX EARNINGS(UNAUDITED) For the Three Months For the Six Months
Ended June 30, Ended June 30,
-----------------------------------------
Millions of dollars except
per share amounts 2003 2002 2003 2002
- --------------------------------------------------------------------------------
Net earnings $177 $ 114 $ 311 $ 136
- --------------------------------------------------------------------------------
Less:
Earnings from discontinued operations 8 1 8 1
Cumulative effects of accounting changes - - (83) -
- --------------------------------------------------------------------------------
Earnings from continuing operations 169 113 386 135
- --------------------------------------------------------------------------------
Less: Special items
E&P - North America - U.S. Lower 48
Asset sales 20 - 20 2
Environmental and litigation
provisions (1) - (1) 1
Restructuring - (12) - (12)
E&P - North America - Canada
Trading derivatives -- non-hedging 2 4 4 -
Corporate & Other
Environmental and litigation
provisions (26) (13) (40) (35)
Insurance settlements - - - 2
Restructuring (17) - (17) -
- --------------------------------------------------------------------------------
Total special items (22) (21) (34) (42)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings $ 191 $ 134 $ 420 $ 177
================================================================================
Adjusted after-tax diluted
earnings per share $ 0.73 $ 0.55 $ 1.60 $ 0.72
================================================================================
The preceding table reconciles adjusted after-tax earnings to net earnings.
Special items represent certain significant matters which positively or
negatively impact net earnings that management determines to be not
representative of the company's ongoing operations. Examples of such items which
have generally been excluded in determining adjusted after-tax earnings include:
gain/loss from major asset sales; environmental remediation costs primarily
related to inactive, closed or previously owned company facilities and third
party sites; costs or settlements associated with major restructuring plans;
litigation settlement costs primarily associated with former company operations
or closed/inactive facilities; significant asset impairments due to changes in
commodity prices; material damage to company facilities or operations due to
fire, explosion, earthquakes, storms or other 'acts of god' not covered by
insurance; certain costs associated with major acquisitions including litigation
and significant trading derivatives; insurance recoveries associated with former
company operations or for costs incurred in prior years. Other companies may
define special items differently; hence, we cannot assure that adjusted
after-tax earnings are comparable with similarly titled amounts reported by
other companies.
EBITDAX (UNAUDITED) For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------------------------------
Millions of dollars except
per share amounts 2003 2002 2003 2002
- --------------------------------------------------------------------------------
Net Earnings $ 177 $ 114 $ 311 $ 136
Less:
Earnings from discontinued operations 8 1 8 1
Cumulative effects of accounting changes - - (83) -
Special items (22) (21) (34) (42)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings 191 134 420 177
Add-backs to adjusted after-tax earnings:
Depreciation, depletion and amortization 255 255 515 479
Asset impairments 3 21 3 21
Dry hole costs 10 13 81 41
Exploration expenses (including
amortization of undeveloped
leasehold costs) 88 61 143 120
Current income taxes 100 90 238 152
Deferred income taxes 37 17 74 7
Interest expense (a) 36 43 74 94
- --------------------------------------------------------------------------------
EBITDAX $ 720 $ 634 $1,548 $1,091
================================================================================
EBITDAX per share (diluted) $ 2.65 $ 2.58 $ 5.69 $ 4.44
<FN>
(a) Net of capitalized interest of: 19 10 35 19
</FN>
#####