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 4Q earnings up 79%; full-year 2003 results nearly double previous year
-----------------------------------------------------------------------------
El Segundo, Calif., Feb. 3, 2004 - Unocal Corporation (NYSE: UCL) today
reported preliminary net earnings for the fourth quarter of $180 million, or
68 cents per share (diluted), 79 percent above the $96 million, or 38 cents
per share (diluted) reported in the same period a year ago.
Unocal's preliminary adjusted after-tax earnings for the fourth quarter
2003 were $167 million, or 63 cents per share (diluted). This compares with the
Thomson/First Call median of analyst estimates (published Feb. 2, 2004) of 62
cents per share. Unocal's adjusted after-tax earnings were $123 million, or 48
cents per share (diluted), in the fourth quarter 2002, and $190 million, or 72
cents per share (diluted), in the third quarter 2003. Adjusted after-tax
earnings are net earnings excluding special items, earnings from discontinued
operations and cumulative effects of accounting changes.
4th 3rd 4th
CONSOLIDATED RESULTS (UNAUDITED) Quarter Quarter Quarter
-------------------------------------
Millions of dollars except per share amounts 2003 2003 2002
- --------------------------------------------------------------------------------
Earnings from continuing operations $ 172 $ 152 $ 96
Earnings from discontinued operations 8 - -
- --------------------------------------------------------------------------------
Net earnings 180 152 96
- --------------------------------------------------------------------------------
Less: Earnings from discontinued operations 8 - -
Less: Special items 5 (38) (27)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings $ 167 $ 190 $ 123
================================================================================
DILUTED EARNINGS PER SHARE DATA (UNAUDITED)
Net earnings per share:
Continuing operations $ 0.65 $ 0.58 $ 0.38
Discontinued operations 0.03 - -
- --------------------------------------------------------------------------------
Total net earnings per share $ 0.68 $ 0.58 $ 0.38
- --------------------------------------------------------------------------------
Adjusted after-tax earnings per share $ 0.63 $ 0.72 $ 0.48
- --------------------------------------------------------------------------------
REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $1,589 $1,541 $1,583
================================================================================
In the fourth quarter 2003, after-tax special items included a $29
million earnings benefit as the result of lower Canadian statutory tax rates and
$17 million from insurance settlements. The positive special items were offset
by a $28 million (after-tax) debt repurchase premium and an after-tax provision
of $15 million for environmental and litigation matters related primarily to
2
formerly operated sites or sites previously sold with retained liabilities. All
of the special items are detailed in the Adjusted After-tax Earnings table.
Unocal's fourth quarter 2003 adjusted after-tax earnings (compared with
4Q 2002) reflected higher natural gas and liquids prices. These positive factors
were partially offset by lower North America natural gas and liquids production
and increased administrative and general expense due principally to higher
pension-related costs.
Worldwide hydrocarbon liquids and natural gas production for the fourth
quarter 2003 averaged 420,000 barrels of oil equivalent (BOE) per day, compared
with 451,000 BOE per day in the same period a year ago. The production decline
reflected lower North America results primarily because of asset sales in the
Lower 48 operations. The lower North America production was partially offset by
increases in international liquids and natural gas production.
Fourth-quarter 2003 worldwide price realizations (including hedging
activities) for natural gas averaged $3.65 per thousand cubic feet (mcf), up
from $3.10 during the prior year's fourth quarter. The company's worldwide
liquids price realizations (including hedging activities) were $28.33 per
barrel, up from $25.44 in 2002. Hedging activities in the fourth quarter
increased worldwide liquids realizations by 19 cents per barrel and worldwide
natural gas realizations by 14 cents per mcf.
Total revenues for the quarter were $1.59 billion, up from $1.58 billion
recorded a year ago.
Unocal's EBITDAX for the fourth quarter 2003 was $661 million, or $2.41
per share (diluted). This compares with $607 million, or $2.38 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 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.
Full-year 2003 results
- ----------------------
For the full-year 2003, Unocal reported preliminary unaudited net
earnings of $643 million, or $2.46 per share (diluted). The results were nearly
double the $331 million, or $1.34 per share (diluted) recorded for 2002.
Unocal's preliminary adjusted after-tax earnings for the full-year 2003
were $777 million, or $2.95 per share (diluted). This compares with $426
million, or $1.72 per share (diluted), for the full-year 2002. The special items
are detailed in the Adjusted After-tax Earnings table included with this news
release.
3
For the Year
CONSOLIDATED RESULTS (UNAUDITED) Ended December 31,
-------------------------
Millions of dollars except per share amounts 2003 2002
- --------------------------------------------------------------------------------
Earnings from continuing operations $ 710 $ 330
Earnings from discontinued operations 16 1
Cumulative effects of accounting changes (83) -
- --------------------------------------------------------------------------------
Net earnings 643 331
- --------------------------------------------------------------------------------
Less: Earnings from discontinued operations 16 1
Less: Cumulative effects of accounting changes (83) -
Less: Special items (67) (96)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings $ 777 $ 426
================================================================================
DILUTED EARNINGS PER SHARE DATA (UNAUDITED)
Net earnings per share:
Continuing operations $ 2.70 $ 1.34
Discontinued operations 0.06 -
Cumulative effects of accounting changes (0.30) -
- --------------------------------------------------------------------------------
Total net earnings per share $ 2.46 $ 1.34
- --------------------------------------------------------------------------------
Adjusted after-tax earnings per share $ 2.95 $ 1.72
- --------------------------------------------------------------------------------
REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $6,539 $5,297
================================================================================
Net cash provided from operating activities increased to $1.95 billion in
2003, from $1.57 billion in 2002. Unocal's EBITDAX for the full-year 2003 was
$2.92 billion, or $10.71 per share (diluted), compared with $2.30 billion, or
$9.29 per share (diluted), for 2002.
The company's total consolidated long-term debt (including current
maturities) was $2.88 billion at Dec. 31, 2003. Cash and cash-equivalents were
$404 million at Dec. 31, 2003.
"We had an outstanding year from a financial and operating standpoint,"
said Charles R. Williamson, Unocal chairman and chief executive officer. "We
continued to reap the benefits of strong commodity prices and increased our
overseas liquids and gas production levels. We expect further growth in
international production under new or amended sales contracts that were
negotiated during the year."
Unocal's operations highlights for 2003
- ---------------------------------------
- - Significant deepwater discoveries in the Gulf of Mexico (St. Malo, Puma) and
Indonesia (Gehem).
- - Initiated production on the deepwater West Seno project in Indonesia.
- - Signed preliminary agreements in Thailand to extend the gas sales contracts
and increase contract volumes; steps taken to double oil production by 2005.
- - Restructured Unocal's North America business; sold properties to reduce unit
operating costs and improve overall margins.
- - Signed production-sharing contracts for exploration and production in the
Xihu Trough in the East China Sea.
- - Signed a gas sales agreement and approved a development plan for the
Moulavi Bazar field in Bangladesh.
4
- - Major progress on construction of the Azerbaijan International Operating
Company (AIOC) Phase 1 project in the Caspian Sea and related export pipeline.
- - Successfully replaced all of our 2003 production and most of the reserves
sold in the North America restructuring program. Finding, development and
acquisition cost was among the lowest that Unocal has achieved in the
last five years.
- - Reduced debt and other financings by about $500 million; achieved 39%
debt-to-total capitalization ratio.
What to watch for from Unocal in 2004
- -------------------------------------
- - Major new developments near completion, contributing to significant
international growth by 2005 (AIOC, Bangladesh, Thailand oil).
- - Continued deepwater exploration success and appraisal of 2003 deepwater
discoveries (St. Malo, Puma, Gehem); progress on commercialization of
Perdido resources (Trident).
- - Launching Indonesia deepwater gas developments for the Bontang Liquefied
Natural Gas (LNG) plant.
- - Meet $8.00 per BOE finding and development cost target for all of
North America, including the reduced Gulf of Mexico shelf program.
First quarter 2004 outlook
- --------------------------
For the first quarter 2004, Unocal is forecasting adjusted after-tax
earnings of 70 to 80 cents per share (diluted). This forecast compares with the
Thomson/First Call median of analyst estimates (published Feb. 2, 2004) of 73
cents per share for the quarter. The first quarter forecast assumes average
NYMEX benchmark prices of $34.25 per barrel of crude oil and $6.00 per million
British thermal units (mmBtu) for North America natural gas for the period.
Unocal's first quarter adjusted after-tax earnings are expected to change
$8 million for every $1 change in its average worldwide realized price for crude
oil and $3 million 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 first quarter of $40 to $50
million.
The company's current estimate for first quarter 2004 production is
between 410,000 and 420,000 BOE per day. Unocal's current estimate for the
full-year 2004 production is about 450,000 BOE per day.
The first-quarter adjusted after-tax earnings forecast excludes 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.
5
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 today at 1
p.m. PST (4 p.m. EST) over the Internet. To listen to the live webcast, go to
the Investor Presentations 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 fourth 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
project developments, exploratory drilling activity and dry hole costs,
production rates, commodity prices, expected adjusted after-tax earnings and
future finding and development 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.
* * * * *
6
CONSOLIDATED EARNINGS (UNAUDITED) UNOCAL CORPORATION
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
--------------------------------------------------
Millions of dollars except per share amounts 2003 2002 2003 2002
- -------------------------------------------------------------------------------------------------------------------
Revenues
Sales and operating revenues $ 1,578 $ 1,529 $ 6,395 $ 5,224
Interest, dividends and miscellaneous income 7 14 25 31
Gain on sales of assets 4 40 119 42
- -------------------------------------------------------------------------------------------------------------------
Total revenues 1,589 1,583 6,539 5,297
Costs and other deductions
Crude oil, natural gas and product purchases 497 577 2,126 1,701
Operating expense 375 389 1,340 1,338
Administrative and general expense 61 37 260 151
Depreciation, depletion and amortization 242 249 988 973
Asset impairments 7 20 93 47
Dry hole costs 33 26 128 107
Exploration expense 69 66 251 246
Interest expense 71 45 190 179
Property and other operating taxes 20 19 81 60
Distributions on convertible preferred securities of subsidiary trust 9 9 33 33
- -------------------------------------------------------------------------------------------------------------------
Total costs and other deductions 1,384 1,437 5,490 4,835
Earnings from equity investments 42 31 192 154
- -------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before
income taxes and minority interests 247 177 1,241 616
- -------------------------------------------------------------------------------------------------------------------
Income taxes 74 77 522 280
Minority interests 1 4 9 6
- -------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 172 96 710 330
- -------------------------------------------------------------------------------------------------------------------
Earnings from discontinued operations 8 - 16 1
Cumulative effects of accounting changes (a) - - (83) -
- -------------------------------------------------------------------------------------------------------------------
Net earnings $ 180 $ 96 $ 643 $ 331
===================================================================================================================
Basic earnings per share of common stock (b)
Continuing operations $ 0.66 $ 0.38 $ 2.75 $ 1.34
Net earnings $ 0.69 $ 0.38 $ 2.49 $ 1.34
Diluted earnings per share of common stock (c)
Continuing operations $ 0.65 $ 0.38 $ 2.70 $ 1.34
Net earnings $ 0.68 $ 0.38 $ 2.46 $ 1.34
Cash dividends declared per share of common stock $ 0.20 $ 0.20 $ 0.80 $ 0.80
- -------------------------------------------------------------------------------------------------------------------
<FN>
(a) Net of tax (benefit) $ - $ - $ (48) $ -
(b) Basic weighted average shares outstanding (in thousands) 259,521 253,526 258,563 246,759
(c) Diluted weighted average shares outstanding (in thousands) 274,025 254,775 272,722 247,679
</FN>
7
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) UNOCAL CORPORATION
At December 31,
-----------------------------
Millions of dollars 2003 2002
- ---------------------------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 404 $ 168
Other current assets - net 1,587 1,207
Investments and long-term receivables - net 893 1,044
Properties - net 8,324 7,879
Goodwill 131 122
Other assets 459 426
- ---------------------------------------------------------------------------------------------------
Total assets $11,798 $10,846
===================================================================================================
Liabilities and Stockholders' Equity
Current liabilities (a) $ 2,085 $ 1,632
Long-term debt and capital leases 2,635 3,002
Deferred income taxes 704 593
Accrued abandonment, restoration and environmental liabilities 844 622
Other deferred credits and liabilities 960 902
Minority interests 39 275
Convertible preferred securities of a subsidiary trust 522 522
Stockholders' equity 4,009 3,298
- ---------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $11,798 $10,846
===================================================================================================
<FN>
(a) Includes current portion of LTD of: 248 6
</FN>
8
CONSOLIDATED CASH FLOWS (UNAUDITED) UNOCAL CORPORATION
For the Twelve Months
Ended December 31,
--------------------------------
Millions of dollars 2003 2002
- -------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net earnings $ 643 $ 331
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation, depletion and amortization 988 973
Asset impairments 93 47
Dry hole costs 128 107
Amortization of exploratory leasehold costs 108 98
Deferred income taxes 56 22
Gain on sales of assets (119) (42)
Gain on disposal of discontinued operations (25) (2)
Pension expense net of contributions 58 22
Restructuring provisions net of payments 18 2
Cumulative effect of accounting changes 83 -
Other 17 (73)
Working capital and other changes related to operations (99) 86
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,949 1,571
- -------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Capital expenditures (includes dry hole costs) (1,718) (1,670)
Proceeds from sales of assets 642 163
Proceeds from sale of discontinued operations 11 3
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,065) (1,504)
- -------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Long-term borrowings 205 585
Reduction of long-term debt and capital lease obligations (452) (495)
Minority interests (257) (8)
Proceeds from issuance of common stock 58 21
Dividends paid on common stock (207) (196)
Loans to key employees 11 6
Other (6) (2)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (648) (89)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 236 (22)
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 168 190
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 404 $ 168
===================================================================================================================
9
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT (UNAUDITED)
4th Q 2003 3rd 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) $ 61 $ 58 $ 77 $ 85
Alaska 16 16 12 12
Canada 32 7 15 15
-------------------------------------------------
Total North America 109 81 104 112
International
Far East 114 114 115 115
Other 24 24 21 21
-------------------------------------------------
Total International 138 138 136 136
-------------------------------------------------
Total Exploration & Production 247 219 240 248
-------------------------------------------------
Trade - - 3 3
Midstream 21 17 16 17
Geothermal and Power Operations 12 12 19 19
Corporate and Other
Administrative and General (26) (26) (21) (21)
Interest Expense - Net (54) (26) (32) (32)
Environmental and Litigation (24) (8) (33) (15)
Other (a) (4) (21) (40) (29)
- -------------------------------------------------------------------------------------------
After-tax earnings from
continuing operations 172 167 152 190
After-tax earnings from
discontinued operations 8 - - -
- -------------------------------------------------------------------------------------------
After-tax earnings $ 180 $ 167 $ 152 $ 190
===========================================================================================
<FN>
(a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings table.
(b) Includes earnings (loss) from:
Onshore / Shelf 74 71 85 93
Deep water (13) (13) (8) (8)
</FN>
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT (UNAUDITED)
4th Q 2003 4th 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) $ 61 $ 58 $ (4) $ 41
Alaska 16 16 1 1
Canada 32 7 5 6
--------------------------------------------------
Total North America 109 81 2 48
International
Far East 114 114 111 111
Other 24 24 29 29
--------------------------------------------------
Total International 138 138 140 140
--------------------------------------------------
Total Exploration & Production 247 219 142 188
--------------------------------------------------
Trade - - 3 3
Midstream 21 17 45 15
Geothermal and Power Operations 12 12 5 5
Corporate and Other
Administrative and General (26) (26) (18) (18)
Interest Expense - Net (54) (26) (35) (35)
Environmental and Litigation (24) (8) (26) (5)
Other (a) (4) (21) (20) (30)
- -------------------------------------------------------------------------------------------
After-tax earnings from
continuing operations 172 167 96 123
After-tax earnings from
discontinued operations 8 - - -
- -------------------------------------------------------------------------------------------
After-tax earnings $ 180 $ 167 $ 96 $ 123
===========================================================================================
<FN>
(a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings table.
(b) Includes earnings (loss) from:
Onshore / Shelf 74 71 12 57
Deep water (13) (13) (16) (16)
</FN>
10
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT
(UNAUDITED)
For the Years Ended Decembe 31,
-------------------------------------------------
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) $ 338 $ 324 $ 33 $ 87
Alaska 57 57 - -
Canada 79 50 - 6
-------------------------------------------------
Total North America 474 431 33 93
International
Far East 466 466 434 434
Other 95 95 69 69
-------------------------------------------------
Total International 561 561 503 503
-------------------------------------------------
Total Exploration & Production 1,035 992 536 596
-------------------------------------------------
Trade (2) (2) 4 4
Midstream 73 70 104 74
Geothermal and Power Operations 50 50 30 30
Corporate and Other
Administrative and General (92) (92) (82) (82)
Interest Expense - Net (145) (117) (128) (128)
Environmental and Litigation (102) (28) (76) (11)
Other (a) (107) (96) (58) (57)
- -------------------------------------------------------------------------------------------
After-tax earnings from
continuing operations 710 777 330 426
After-tax earnings from
discontinued operations 16 - 1 -
Cumulative effects of accounting changes (83) - - -
- -------------------------------------------------------------------------------------------
After-tax earnings $ 643 $ 777 $ 331 $ 426
===========================================================================================
<FN>
(a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings table.
(b) Includes earnings (loss) from:
Onshore / Shelf 419 405 77 131
Deep water (81) (81) (44) (44)
</FN>
11
OPERATING HIGHLIGHTS UNOCAL CORPORATION
Three Months Twelve Months
Ended December 31,
----------------------------------
2003 2002 2003 2002
- --------------------------------------------------------------------------------
North America Net Daily Production
Liquids (thousand barrels)
U.S. Lower 48 (a) (b) 37 46 43 52
Alaska 21 23 21 24
Canada 17 18 17 18
- --------------------------------------------------------------------------------
Total liquids 75 87 81 94
Natural gas - dry basis (million cubic feet)
U.S. Lower 48 (a) (b) 516 659 616 719
Alaska 50 68 57 76
Canada 89 91 90 91
- --------------------------------------------------------------------------------
Total natural gas 655 818 763 886
North America Average Prices (excluding hedging activities) (c)
Liquids (per barrel)
U. S. Lower 48 $27.73 $25.20 $28.07 $22.85
Alaska $30.73 $26.96 $29.85 $24.21
Canada $22.94 $21.84 $24.76 $20.70
Average $27.52 $24.94 $27.84 $22.79
Natural gas (per mcf)
U. S. Lower 48 $ 4.47 $ 3.77 $ 5.18 $ 3.01
Alaska $ 1.46 $ 1.20 $ 1.31 $ 1.42
Canada $ 4.56 $ 3.50 $ 5.07 $ 2.67
Average $ 4.30 $ 3.51 $ 4.88 $ 2.83
- --------------------------------------------------------------------------------
North America Average Prices (including hedging activities) (c)
Liquids (per barrel)
U. S. Lower 48 $28.50 $25.19 $27.72 $22.87
Alaska $30.73 $26.96 $29.85 $24.21
Canada $22.94 $21.84 $24.76 $20.70
Average $27.90 $24.94 $27.66 $22.81
Natural gas (per mcf)
U. S. Lower 48 $ 4.91 $ 3.75 $ 5.07 $ 3.07
Alaska $ 1.46 $ 1.20 $ 1.31 $ 1.42
Canada $ 4.34 $ 3.31 $ 4.78 $ 2.66
Average $ 4.61 $ 3.47 $ 4.76 $ 2.88
- --------------------------------------------------------------------------------
<FN>
(a) Includes proportional interests in production of equity investees.
(b) Includes minority interests of :
Liquids - 3 - 7
Natural gas - 41 5 82
Barrels oil equivalent - 10 1 21
(c) Excludes gains/losses on derivative positions not accounted for as hedges
and ineffective portions of hedges.
</FN>
12
OPERATING HIGHLIGHTS (CONTINUED) UNOCAL CORPORATION
Three Months Twelve Months
Ended December 31,
----------------------------------
2003 2002 2003 2002
- --------------------------------------------------------------------------------
International Net Daily Production (d)
Liquids (thousand barrels)
Far East 63 53 59 53
Other (a) 19 21 20 20
- --------------------------------------------------------------------------------
Total liquids 82 74 79 73
Natural gas - dry basis (million cubic feet)
Far East 844 823 877 847
Other (a) 78 96 88 93
- --------------------------------------------------------------------------------
Total natural gas 922 919 965 940
International Average Prices (e)
Liquids (per barrel)
Far East $28.40 $25.36 $27.30 $22.88
Other $29.68 $27.55 $28.29 $25.47
Average $28.73 $26.01 $27.54 $23.57
Natural gas (per mcf)
Far East $ 2.96 $ 2.77 $ 2.83 $ 2.75
Other $ 3.00 $ 2.83 $ 2.90 $ 2.72
Average $ 2.96 $ 2.78 $ 2.84 $ 2.75
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Worldwide Net Daily Production (a) (b) (d)
Liquids (thousand barrels) 157 161 160 167
Natural gas - dry basis (million cubic feet) 1,577 1,737 1,728 1,826
Barrels oil equivalent (thousands) 420 451 448 471
Worldwide Average Prices (excluding hedging activities) (c)
Liquids (per barrel) $28.14 $25.44 $27.70 $23.13
Natural gas (per mcf) $3.51 $3.12 $3.73 $2.79
Worldwide Average Prices (including hedging activities) (c) (e)
Liquids (per barrel) $28.33 $25.44 $27.60 $23.14
Natural gas (per mcf) $3.65 $3.10 $3.66 $2.81
- --------------------------------------------------------------------------------
<FN>
(a) Includes proportional interests in production of equity investees.
(b) Includes minority interests of :
Liquids - 3 - 7
Natural gas - 41 5 82
Barrels oil equivalent - 10 1 21
(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>
13
Three Months Twelve Months
ADJUSTED AFTER-TAX EARNINGS (UNAUDITED) Ended December 31,
---------------------------------
Millions of dollars except per share amounts 2003 2002 2003 2002
- --------------------------------------------------------------------------------
Net earnings $ 180 $ 96 $643 $331
- --------------------------------------------------------------------------------
Less:
Earnings from discontinued operations 8 - 16 1
Cumulative effects of accounting changes - - (83) -
- --------------------------------------------------------------------------------
Earnings from continuing operations 172 96 710 330
- --------------------------------------------------------------------------------
Less: Special items
E&P - North America - U.S. Lower 48
Asset sales 3 (20) 46 (18)
Held for sale impairments - (8) (31) (8)
Environmental and litigation provisions - - (1) 1
Minority interests acquisition - (8) - (8)
Restructuring - - - (12)
Uninsured losses - (9) - (9)
E&P - North America - Canada
Statutory tax rate change 25 - 25 -
Trading derivatives -- non-hedging - (1) 4 (6)
Midstream
Asset sales - 30 - 30
Canadian statutory tax rate change 4 - 4 -
Held for sale impairments - - (1) -
Corporate & Other
Asset sales - 14 - 14
Environmental and litigation provisions (15) (25) (78) (82)
Debt repurchase premium (28) - (28) -
Insurance settlements 17 - 17 2
Restructuring (1) - (24) -
Total special items 5 (27) (67) (96)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings $ 167 $ 123 $ 777 $ 426
================================================================================
Adjusted after-tax diluted earnings per share $0.63 $0.48 $2.95 $1.72
================================================================================
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.
Three Months Twelve Months
EBITDAX (UNAUDITED) Ended December 31,
- --------------------------------------------------------------------------------
Millions of dollars 2003 2002 2003 2002
- --------------------------------------------------------------------------------
Net Earnings $ 180 $ 96 $ 643 $ 331
Less:
Earnings from discontinued operations 8 - 16 1
Cumulative effects of accounting changes - - (83) -
Special items 5 (27) (67) (96)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings 167 123 777 426
Add-backs to adjusted after-tax earnings:
Depreciation, depletion and amortization 242 249 988 973
Asset impairments 7 7 41 34
Dry hole costs 33 26 128 107
Exploration expenses (including amortization
of undeveloped leasehold costs) 69 66 251 246
Current income taxes 113 81 415 260
Deferred income taxes (8) 10 163 75
Interest expense (a) 38 45 157 179
- --------------------------------------------------------------------------------
EBITDAX $ 661 $607 $2,920 $2,300
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EBITDAX per share (diluted) $2.41 $2.38 $10.71 $ 9.29
<FN>
(a) Net of capitalized interest of: 14 13 60 46
</FN>