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 1Q earnings up 101%
---------------------------
El Segundo, Calif., April 28, 2004 - Unocal Corporation (NYSE: UCL) today
reported preliminary net earnings for the first quarter 2004 of $269 million, or
$1.00 per share (diluted), 101 percent above the $134 million, or 52 cents per
share (diluted), reported in the same period a year ago.
Unocal's preliminary adjusted after-tax earnings for the first quarter
2004 were $239 million, or 89 cents per share (diluted). This compares with the
Thomson/First Call median of analyst estimates (published April 26, 2004) of 80
cents per share. Unocal's adjusted after-tax earnings were $229 million, or 87
cents per share (diluted), in the first quarter 2003, and $167 million, or 63
cents per share (diluted), in the fourth quarter 2003. Adjusted after-tax
earnings are net earnings excluding special items, earnings from discontinued
operations and cumulative effects of accounting changes.
CONSOLIDATED RESULTS (UNAUDITED) 1st Q 4th Q 1st Q
-------------------------------------
Millions of dollars except per share amounts 2004 2003 2003
- --------------------------------------------------------------------------------
Earnings from continuing operations $ 269 $ 172 $ 217
Earnings from discontinued operations - 8 -
Cumulative effect of accounting changes - - (83)
- --------------------------------------------------------------------------------
Net earnings 269 180 134
- --------------------------------------------------------------------------------
Less: Earnings from discontinued operations - 8 -
Less: Cumulative effect of accounting changes - - (83)
Less: Special items 30 5 (12)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings $ 239 $ 167 $ 229
================================================================================
DILUTED EARNINGS PER SHARE DATA (UNAUDITED)
Net earnings per share:
Continuing operations $ 1.00 $ 0.65 $ 0.82
Discontinued operations - 0.03 -
Cumulative effect of accounting changes - - (0.30)
- --------------------------------------------------------------------------------
Total net earnings per share $ 1.00 $ 0.68 $ 0.52
- --------------------------------------------------------------------------------
Adjusted after-tax earnings per share $ 0.89 $ 0.63 $ 0.87
- --------------------------------------------------------------------------------
REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $ 1,892 $ 1,589 $ 1,789
================================================================================
"We had an outstanding first quarter, recording one the highest profit
levels in the company's history," said Charles R. Williamson, Unocal chairman,
chief executive officer and president.
-1-
"We lowered exploration expense, improved results from non-E&P segments and
reduced our overall financings."
Williamson went on to say, "We continued to execute on our major
development programs in the Caspian Sea, Thailand, Bangladesh and Indonesia -
programs that we believe will generate the production growth we are forecasting
for 2005 and 2006."
Unocal's operations highlights for 1Q 2004
- ------------------------------------------
- - Drilled significant deepwater discovery in the Gulf of Mexico (Puma) and
successful appraisal wells in Indonesia (Gehem and Gula).
- - Drilling of two high-impact deepwater wells - Tobago and Mad Dog Deep - in the
Gulf of Mexico.
- - Continued ramp-up of production on the deepwater West Seno project in
Indonesia, although slower than forecast.
- - Continued discussion and negotiation on terms for supplying higher volumes of
natural gas in both the short and long term in Thailand.
- - Submitted development plan to sell natural gas from the Bibiyana field for
Petrobangla, the state oil company, in Bangladesh.
- - Received $60 million in cash for the transfer of Sarulla geothermal interest
to Indonesia's state electric utility.
- - Progressed on construction of the Phase 1 and 2 developments of the Azerbaijan
International Operating Company (AIOC) project in the Caspian Sea
(Unocal, 10.28% working interest); first oil at the wellhead expected at the
end of 2004 or early 2005 for Phase 1.
- - Completed 60 percent of construction of the Baku-Tbilisi-Ceyhan export
pipeline from the Caspian Sea (Unocal, 8.9% equity interest).
- - Reached agreement to sell certain fee mineral interests in the U.S. for
approximately $190 million cash.
1Q 2004 financial and operating details
- ---------------------------------------
In the first quarter 2004, after-tax special items included $27 million
in gains from the sale of certain E&P assets in North America and geothermal
assets in Indonesia, and a $15 million litigation settlement related to a
previous asset sale. Partially offsetting these gains were environmental and
litigation provisions of $12 million. All of the special items are detailed in
the Adjusted After-tax Earnings Reconciliation table included at the end of this
news release.
Unocal's first quarter 2004 adjusted after-tax earnings (compared with 1Q
2003) reflected higher worldwide natural gas prices and lower dry hole costs.
These positive factors were partially offset by lower North America natural gas
and liquids production.
In addition, the first quarter 2003 net earnings had included an
after-tax charge of $83
-2-
million, or 30 cents per share (diluted), for the cumulative effect of adopting
Statement of Financial Accounting Standards No. 143, "Accounting for Asset
Retirement Obligations."
Worldwide hydrocarbon liquids and natural gas production for the first
quarter 2004 averaged 409,000 barrels of oil equivalent (BOE) per day, compared
with 471,000 BOE per day in the same period a year ago. The production decline
was due to the sale of oil and gas producing assets in North America during
2003, which accounted for nearly 50,000 BOE per day, and lower contractor's cost
recovery barrels from certain production-sharing contracts (PSC) in Asia (as a
result of higher commodity prices and recovery of sunk costs), which reduced
production by about 12,000 BOE per day.
First-quarter 2004 worldwide price realizations (including hedging
activities) for natural gas averaged $4.00 per thousand cubic feet (mcf), up
from $3.90 during the prior year's first quarter. The company's first quarter
2004 worldwide liquids price realizations (including hedging activities) were
$30.64 per barrel, up from $29.99 in the first quarter 2003. Hedging activities
in the 2004 first quarter decreased worldwide liquids realizations by $1.00 per
barrel, while increasing worldwide natural gas realizations by 17 cents per mcf.
Total revenues for the 2004 first quarter were $1.89 billion, up from
$1.79 billion recorded for the same period a year ago.
Unocal's EBITDAX for the first quarter 2004 was $756 million, or $2.73
per share (diluted). This compares with $828 million, or $3.05 per share
(diluted), for the same period in 2003. EBITDAX is net earnings before interest,
taxes, depreciation, depletion and amortization, impairments, exploration
expenses, dry hole costs, special items, earnings from discontinued operations
and cumulative effects of accounting changes.
The company's total consolidated long-term debt (including current
maturities) was $3.26 billion at March 31, 2004. Cash and cash-equivalents were
$760 million at March 31, 2004. The increase in debt outstanding during the
first quarter reflects the deconsolidation of Unocal Capital Trust due to an
accounting rule change issued by the Financial Accounting Standards Board. As a
result, the $522 million obligation for the convertible preferred securities has
been removed from the balance sheet and replaced by a liability of $538 million
in 6-1/4 percent junior subordinated debentures of Unocal payable to the trust.
2Q 2004 outlook
- ---------------
For the second quarter 2004, Unocal is forecasting adjusted after-tax
earnings of 65 to 75 cents per share (diluted). This forecast compares with the
Thomson/First Call median of analyst estimates (published April 26, 2004) of 72
cents per share for the second quarter 2004. Unocal's second quarter forecast
assumes average NYMEX benchmark prices of $36.50 per barrel of crude oil and
$5.70 per million British thermal units (mmBtu) for North America natural gas
for the period.
-3-
Unocal's second quarter 2004 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 second quarter of $25 to $35
million.
The company's current estimate for second 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 425,000 BOE per day. The full-year 2004
outlook reflects lower contractor's cost recovery barrels from PSCs due to
higher commodity prices, slower than expected production ramp-up from the West
Seno field in Indonesia, and continued suspension of exploration drilling on the
Gulf of Mexico deep shelf.
The second-quarter adjusted after-tax earnings forecast excludes special
items, discontinued operations, and accounting changes. Because of the inherent
uncertainty related to these items, determining whether or when they will occur
and quantifying their dollar impact, Unocal does not believe it is able to
provide a meaningful forecast of 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 today at 1
p.m. PDT (4 p.m. EDT) over the Internet. To listen to the live webcast, go to
the Investor Relations 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 first quarter 2004 and the
comparable prior periods are available in the "Quarterly Fact Book," which is
posted in the Data Warehouse in the Investor Relations section of the company's
web site. The Quarterly Fact Book is also available upon request from Unocal
Investor Relations.
* * * * *
Forward-Looking Statements; Preliminary 2004 First Quarter Results
- ------------------------------------------------------------------
This news release contains forward-looking statements, which may be identified
by words such as "expects," "anticipates," "intends," "plans," "believes,"
"estimates," "forecasts," "will" and words of similar import. These
forward-looking statements include, but are not limited to, statements regarding
expected project developments, exploratory drilling activity and dry hole costs,
production rates and timing, commodity prices, future sales and transactions,
and expected adjusted after-tax earnings.
-4-
These statements are not guarantees of future performance or outcomes. They 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 factors including 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, political, geological, operating and
economic considerations; performance by third parties of their contractual
obligations; and other factors discussed in Unocal's 2003 Annual Report on Form
10-K, as amended, and subsequent reports filed with the U.S. Securities and
Exchange Commission (SEC).
Investors are urged to consider closely the disclosures in Unocal's 2003 Annual
Report on Form 10-K, as amended, 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.
In addition, disclosures in this news release, including in the attached tables,
regarding Unocal's first quarter 2004 financial results are preliminary. These
disclosures are subject to change in connection with Unocal's preparation and
filing of its Form 10-Q for the first quarter 2004.
Unocal undertakes no obligation to update the forward-looking statements or
first quarter 2004 financial results in this news release, including the
attached tables, to reflect future events or circumstances. All such statements
are expressly qualified in their entirety by this cautionary statement.
Supplemental Non-GAAP Financial Measures
- ----------------------------------------
The news release includes certain "non-GAAP financial measures" as defined under
SEC regulations. Specifically, Unocal has referred to (1) adjusted after-tax
earnings and (2) EBITDAX.
Adjusted after-tax earnings are defined as net earnings excluding special items,
earnings from discontinued operations and cumulative effects of accounting
changes. 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 events
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 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; and insurance recoveries associated with
former company operations or for costs incurred in prior years.
Unocal's management believes adjusted after-tax earnings to be useful to
investors and analysts as it facilitates a focus on the company's ongoing
operations. The measure also allows for convenient comparisons to the company's
prior reporting periods, as well as the results of ongoing operations of other
companies in the exploration and production industry that utilize the
"successful efforts" method of accounting. Adjusted after-tax earnings is not a
substitute for net earnings determined in accordance with GAAP as a measure of
profitability, because the special items excluded from adjusted after-tax
earnings do in fact positively or negatively impact net earnings. Other
companies may define special items differently and the Thomson/First Call median
of analyst estimates may not use a similar definition; hence, adjusted after-tax
earnings may not be comparable with similarly titled amounts reported by other
companies or analyst estimates reported by Thomson/First Call.
The news release also includes information regarding EBITDAX, which is defined
as 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. Unocal's management believes this measure is helpful to
investors and analysts because it facilitates a comparison of companies like
Unocal that use the "successful efforts" accounting method with other companies
in the exploration and production industry that utilize the "full-cost" method
of accounting. EBITDAX is not a substitute for net earnings determined in
accordance with GAAP as a measure of profitability.
-5-
A quantitative reconciliation of adjusted after-tax earnings and EBITDAX to GAAP
net earnings is found in this news release, including certain of the tables
accompanying the text.
* * * * *
CONSOLIDATED EARNINGS (UNAUDITED) UNOCAL CORPORATION
For the Three Months
Ended March 31,
----------------------------
Millions of dollars except per share amounts 2004 2003
- -----------------------------------------------------------------------------------------------------
Revenues
Sales and operating revenues $ 1,837 $ 1,775
Interest, dividends and miscellaneous income 11 11
Gain on sales of assets 44 3
- -----------------------------------------------------------------------------------------------------
Total revenues 1,892 1,789
Costs and other deductions
Crude oil, natural gas and product purchases 750 646
Operating expense 288 294
Administrative and general expense 63 51
Depreciation, depletion and amortization 232 260
Impairments 5 -
Dry hole costs 25 71
Exploration expense 50 55
Interest expense 41 38
Property and other operating taxes 20 22
Distributions on convertible preferred securities of subsidiary trust - 8
- -----------------------------------------------------------------------------------------------------
Total costs and other deductions 1,474 1,445
Earnings from equity investments 37 43
- -----------------------------------------------------------------------------------------------------
Earnings from continuing operations before
income taxes and minority interests 455 387
- -----------------------------------------------------------------------------------------------------
Income taxes 181 168
Minority interests 5 2
- -----------------------------------------------------------------------------------------------------
Earnings from continuing operations 269 217
Cumulative effect of accounting changes (a) - (83)
- -----------------------------------------------------------------------------------------------------
Net earnings $ 269 $ 134
=====================================================================================================
Basic earnings per share of common stock (b)
Continuing operations $ 1.03 $ 0.84
Cumulative effect of accounting changes - (0.32)
- -----------------------------------------------------------------------------------------------------
Net earnings $ 1.03 $ 0.52
=====================================================================================================
Diluted earnings per share of common stock (c)
Continuing operations $ 1.00 $ 0.82
Cumulative effect of accounting changes - (0.30)
- -----------------------------------------------------------------------------------------------------
Net earnings $ 1.00 $ 0.52
=====================================================================================================
Cash dividends declared per share of common stock $ 0.20 $ 0.20
- -----------------------------------------------------------------------------------------------------
<FN>
(a) Net of tax (benefit) $ - $ (48)
(b) Basic weighted average shares outstanding (in thousands) 261,974 258,005
(c) Diluted weighted average shares outstanding (in thousands) 276,889 271,729
</FN>
-6-
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) UNOCAL CORPORATION
At March 31, At December 31,
Millions of dollars 2004 2003
- ------------------------------------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 760 $ 404
Other current assets - net 1,491 1,587
Investments and long-term receivables - net 871 892
Properties - net 8,399 8,324
Goodwill 131 131
Other assets 484 460
- ------------------------------------------------------------------------------------------------------------
Total assets $ 12,136 $ 11,798
============================================================================================================
Liabilities and Stockholders' Equity
Current liabilities (a) $ 2,046 $ 2,085
Long-term debt 3,199 2,635
Deferred income taxes 721 704
Accrued abandonment, restoration and environmental liabilities 860 844
Other deferred credits and liabilities 1,013 960
Minority interests 47 39
Convertible preferred securities of a subsidiary trust - 522
Stockholders' equity 4,250 4,009
- ------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 12,136 $ 11,798
============================================================================================================
<FN>
(a) Includes current portion of LTD of: 62 248
</FN>
-7-
CONSOLIDATED CASH FLOWS(UNAUDITED) UNOCAL CORPORATION
For the Three Months
Ended March 31,
--------------------------------
Millions of dollars 2004 2003
- -------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net earnings $ 269 $ 134
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation, depletion and amortization 232 260
Impairments 5 -
Dry hole costs 25 71
Amortization of exploratory leasehold costs 16 24
Deferred income taxes 28 30
Gain on sales of assets (44) (3)
Pension expense net of contributions 23 20
Restructuring provisions net of payments (7) -
Cumulative effect of accounting changes - 83
Other (6) 12
Working capital and other changes related to operations
Accounts and notes receivable 65 (122)
Inventories 31 6
Accounts payable 29 86
Taxes payable 106 123
Other (29) (39)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 743 685
- -------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Capital expenditures (includes dry hole costs) (360) (429)
Proceeds from sales of assets 78 66
Other 52 -
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (230) (363)
- -------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Long-term borrowings 40 16
Reduction of long-term debt and capital lease obligations (196) (100)
Minority interests - (2)
Repurchases of common stock (20) -
Proceeds from issuance of common stock 51 1
Dividends paid on common stock (52) (52)
Loans to key employees 20 3
- -------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (157) (134)
- -------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 356 188
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 404 168
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 760 $ 356
===================================================================================================================
-8-
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT (UNAUDITED)
1st Q 2004 4th 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. $ 116 $ 95 $ 77 $ 74
Canada 12 12 32 7
---------------------------------------------
Total North America 128 107 109 81
International
Asia 158 158 126 126
Other 17 17 12 12
---------------------------------------------
Total International 175 175 138 138
---------------------------------------------
Total Exploration & Production 303 282 247 219
---------------------------------------------
Midstream & Marketing 23 23 21 17
Geothermal 37 16 12 12
Corporate and Other
Administrative and General (27) (27) (26) (26)
Interest Expense - Net (32) (32) (54) (26)
Environmental and Litigation (16) (5) (24) (8)
Other (19) (18) (4) (21)
- ------------------------------------------------------------------------------------------------------------------
After-tax earnings from continuing operations 269 239 172 167
After-tax earnings from discontinued operations - - 8 -
- ------------------------------------------------------------------------------------------------------------------
After-tax earnings $ 269 $ 239 $ 180 $ 167
==================================================================================================================
<FN>
(a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings
Reconciliation table.
</FN>
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT (UNAUDITED)
1st Q 2004 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. $ 116 $ 95 $ 126 $ 126
Canada 12 12 24 22
---------------------------------------------
Total North America 128 107 150 148
International
Asia 158 158 132 132
Other 17 17 10 10
---------------------------------------------
Total International 175 175 142 142
---------------------------------------------
Total Exploration & Production 303 282 292 290
---------------------------------------------
Midstream & Marketing 23 23 9 9
Geothermal 37 16 12 12
Corporate and Other
Administrative and General (27) (27) (23) (23)
Interest Expense - Net (32) (32) (31) (31)
Environmental and Litigation (16) (5) (17) (3)
Other (19) (18) (25) (25)
- ------------------------------------------------------------------------------------------------------------------
After-tax earnings from continuing operations 269 239 217 229
Cumulative effect of accounting changes - - (83) -
- ------------------------------------------------------------------------------------------------------------------
After-tax earnings $ 269 $ 239 $ 134 $ 229
==================================================================================================================
<FN>
(a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings
Reconciliation table.
</FN>
-9-
OPERATING HIGHLIGHTS UNOCAL CORPORATION
1st Q 1st Q
---------------------
2004 2003
- ------------------------------------------------------------------------------------------
North America Net Daily Production
Liquids (thousand barrels)
U.S. (a) 55 70
Canada 17 18
- ------------------------------------------------------------------------------------------
Total liquids 72 88
Natural gas - dry basis (million cubic feet)
U.S. (a) 515 761
Canada 84 97
- ------------------------------------------------------------------------------------------
Total natural gas 599 858
North America Average Prices (excluding hedging activities) (b)
Liquids (per barrel)
U. S. $ 32.66 $ 31.39
Canada $ 28.51 $ 28.44
Average $ 31.71 $ 30.77
Natural gas (per mcf)
U. S. $ 5.04 $ 5.86
Canada $ 5.38 $ 5.64
Average $ 5.09 $ 5.83
- ------------------------------------------------------------------------------------------
North America Average Prices (including hedging activities) (b)
Liquids (per barrel)
U. S. $ 29.87 $ 30.29
Canada $ 28.51 $ 28.44
Average $ 29.56 $ 29.90
Natural gas (per mcf)
U. S. $ 5.57 $ 5.24
Canada $ 5.08 $ 5.33
Average $ 5.50 $ 5.25
- -----------------------------------------------------------------------------------------
<FN>
(a)Includes proportional interests in production of equity investees.
(b)Excludes gains/losses on derivative positions not accounted for as
hedges and ineffective portions of hedges.
</FN>
-10-
OPERATING HIGHLIGHTS (CONTINUED) UNOCAL CORPORATION
1st Q 1st Q
---------------------
2004 2003
- ------------------------------------------------------------------------------------------
International Net Daily Production (c)
Liquids (thousand barrels)
Asia 66 56
Other (a) 20 20
- ------------------------------------------------------------------------------------------
Total liquids 86 76
Natural gas - dry basis (million cubic feet)
Asia 884 960
Other (a) 25 22
- ------------------------------------------------------------------------------------------
Total natural gas 909 982
International Average Prices (d)
Liquids (per barrel)
Asia $ 31.44 $29.69
Other $ 32.12 $32.44
Average $ 31.57 $30.11
Natural gas (per mcf)
Asia $ 2.97 $ 2.76
Other $ 4.29 $ 4.15
Average $ 2.98 $ 2.77
- ------------------------------------------------------------------------------------------
Worldwide Net Daily Production (a) (c)
Liquids (thousand barrels) 158 164
Natural gas - dry basis (million cubic feet) 1,508 1,840
Barrels oil equivalent (thousands) 409 471
Worldwide Average Prices (excluding hedging activities) (b)
Liquids (per barrel) $ 31.64 $30.49
Natural gas (per mcf) $ 3.83 $ 4.17
Worldwide Average Prices (including hedging activities) (b)
Liquids (per barrel) $ 30.64 $29.99
Natural gas (per mcf) $ 4.00 $ 3.90
- ------------------------------------------------------------------------------------------
<FN>
(a)Includes proportional interests in production of equity investees.
(b)Excludes gains/losses on derivative positions not accounted for as
hedges and ineffective portions of hedges.
(c)International production is presented utilizing the economic interest method.
(d)International did not have any hedging activities.
</FN>
-11-
ADJUSTED AFTER-TAX EARNINGS RECONCILIATION (UNAUDITED)1st Q 4th Q 1st Q
--------------------------
Millions of dollars except per share amounts 2004 2003 2003
- --------------------------------------------------------------------------------
Net earnings $269 $180 $ 134
- --------------------------------------------------------------------------------
Less:
Earnings from discontinued operations - 8 -
Cumulative effect of accounting changes - - (83)
- --------------------------------------------------------------------------------
Earnings from continuing operations 269 172 217
- --------------------------------------------------------------------------------
Less: Special items
E&P - North America - U.S.
Asset sales 6 3 -
Litigation settlement 15 - -
E&P - North America - Canada
Statutory tax rate change - 25 -
Derivatives -- non-hedging - - 2
Midstream & Marketing
Canadian statutory tax rate change - 4 -
Geothermal
Asset sales 21 - -
Corporate & Other
Environmental and litigation provisions (12) (15) (14)
Debt repurchase premium - (28) -
Insurance settlements - 17 -
Restructuring - (1) -
- --------------------------------------------------------------------------------
Total special items 30 5 (12)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings $239 $167 $ 229
================================================================================
Adjusted after-tax earnings per share (diluted) $0.89 $0.63 $0.87
================================================================================
EBITDAX RECONCILIATION (UNAUDITED) 1st Q 1st Q
-----------------------
Millions of dollars except per share amounts 2004 2003
- --------------------------------------------------------------------------------
Net Earnings $ 269 $ 134
Less:
Cumulative effect of accounting changes - (83)
Special items 30 (12)
- --------------------------------------------------------------------------------
Adjusted after-tax earnings 239 229
Add-backs to adjusted after-tax earnings:
Depreciation, depletion and amortization 232 260
Impairments 5 -
Dry hole costs 25 71
Exploration expenses (including amortization of
undeveloped leasehold costs) 50 55
Current income taxes 141 138
Deferred income taxes 23 37
Interest expense (a) 41 38
- --------------------------------------------------------------------------------
EBITDAX $ 756 $ 828
================================================================================
<FN>
EBITDAX per share (diluted) $2.73 $3.05
(a) Net of capitalized interest of: 16 16
</FN>
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