Exhibit 99.1
Unocal
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 reports record quarterly earnings; net up 39%
----------------------------------------------------
El Segundo, Calif., July 29, 2005 - Unocal Corporation (NYSE: UCL) today
reported preliminary net earnings for the second quarter 2005 of $475 million,
or $1.73 per share (diluted), 39 percent above the $341 million, or $1.25 per
share (diluted), reported in the same period a year ago. The net earnings, the
highest quarterly level in the company's history, included a number of special
items discussed below in connection with Unocal's adjusted after-tax earnings.
Unocal's preliminary adjusted after-tax earnings for the second quarter 2005
were $488 million, or $1.77 per share (diluted). This compares with the
Thomson/First Call mean of analyst estimates (published July 25, 2005) of $1.63
per share. In the second quarter 2004, Unocal's adjusted after-tax earnings were
$231 million, or 86 cents per share (diluted). In the first quarter 2005,
Unocal's adjusted after-tax earnings were $441 million, or $1.62 per share
(diluted). Adjusted after-tax earnings are net earnings excluding special items
(discussed below) and the cumulative effect of accounting changes.
CONSOLIDATED RESULTS (UNAUDITED)
Millions of dollars except 2nd Q 1st Q 2nd Q
per share amounts 2005 2005 2004
Earnings from continuing operations $440 $432 $267
Earnings from discontinued operations 35 22 74
Net earnings 475 454 341
Less: Special items in continuing
operations (25) 11 54
Less: Special items in
discontinued operations 12 2 56
Adjusted after-tax earnings $488 $441 $231
DILUTED EARNINGS PER SHARE DATA
(UNAUDITED)
Net earnings per share:
Continuing operations $1.60 $1.58 $0.98
Discontinued operations 0.13 0.08 0.27
Total net earnings per share $1.73 $1.66 $1.25
Adjusted after-tax earnings per share $1.77 $1.62 $0.86
REVENUES FROM CONTINUING OPERATIONS
(UNAUDITED) $2,213 $2,068 $1,858
"Unocal recorded another quarter of strong earnings as the company increased
worldwide crude oil and natural gas production and benefited from continued
strong crude oil and natural
2
gas prices and lower interest expense," said Charles R. Williamson, Unocal
chairman and chief executive officer. "We initiated production from the final
two major projects in our 2005 development pipeline - K2 in the deepwater Gulf
of Mexico and the oil expansion project in Thailand."
Recent operational and financial highlights
- -------------------------------------------
Some of Unocal's recent operational highlights and other developments include:
o Amended the merger agreement with Chevron Corporation (NYSE: CVX) to provide
for increased merger consideration for the company's stockholders upon the
closing of the merger; set a special stockholder meeting date of Aug. 10, 2005
o Entered into a definitive agreement to sell all of the stock of Unocal's
Northrock Resources Ltd. subsidiary to Pogo Producing Company (NYSE: PPP) for
US$1.8 billion in cash; assets account for less than 7 percent of Unocal's
worldwide hydrocarbon reserves; Northrock had reserves of 110 million
barrels-of-oil equivalent (BOE) at year-end 2004 and average daily production
of 28,100 BOE in 2Q 2005; transaction expected to close in 3Q 2005
o Reduced total debt in the second quarter by $190 million to $2.54 billion
o Added $92 million during the second quarter to cash and cash equivalents
balance, bringing total cash to $1.78 billion; net debt (debt minus cash and
cash equivalents) reduced to $765 million
o Increased worldwide production during the second quarter by 14 percent,
compared with 2Q 2004
o Began oil production from K2, an oil field located in deepwater Gulf of Mexico
in Green Canyon block 562; first well placed on production has an initial flow
rate of 8,600 BOE per day gross (Unocal, 12.5% working interest, 1,000 BOE
per day net)
o Ramped up production from the Mad Dog deepwater Gulf of Mexico field
(Unocal 15.6% working interest); 2Q exit rate from two wells of 37,000 BOE
per day gross (Unocal, 5,000 BOE per day net)
o Encountered more than 300 feet of apparent hydrocarbon pay in a secondary
objective at the Knotty Head well, located in Green Canyon block 512 in the
Gulf of Mexico (Unocal, 25% working interest)
o Ramped up oil production from Phase 1 (Central Azeri) in the
Azeri-Chirag-Gunashli development in the Caspian Sea (Unocal, 10.3% working
interest), raising gross AIOC production at the end of the second quarter to
approximately 275,000 BOE per day (Unocal, 25,400 BOE per day net)
o Successfully started up the second oil central processing platform (CPP) at
the Pattani oil development in the Gulf of Thailand, putting the company on
track to achieve our target of
3
ramping up gross crude oil production to 40,000 barrels per day (b/d) in the
third quarter 2005, up from 24,000 b/d at year-end 2004
o Began line fill of the 1,100-mile long Baku-Tbilisi-Ceyhan oil pipeline
(Unocal, 8.9% working interest) from Azerbaijan to Turkey; first tanker from
Ceyhan is expected to load in 4Q 2005
2Q 2005 financial and operating details
- ---------------------------------------
Unocal's second quarter 2005 adjusted after-tax earnings (compared with 2Q 2004)
reflected higher worldwide crude oil and natural gas prices, higher
international production, lower exploration and dry hole costs and lower
interest expense. These positive factors were offset partially by lower North
America natural gas production.
In the second quarter 2005, after-tax special items included a $12 million
after-tax gain from the sale of Unocal's 76 Seadrift LLC subsidiary. This gain
was offset by $25 million after-tax charges for environmental and litigation
provisions. All of the special items are detailed in the Adjusted After-tax
Earnings Reconciliation table included at the end of this news release.
Worldwide hydrocarbon liquids and natural gas production for the second quarter
2005 averaged 459,000 BOE per day, up nearly 14 percent from 404,000 BOE per day
in the same period a year ago. The production increase was due primarily to
higher liquids and natural gas production in Asia.
Second-quarter 2005 worldwide price realizations (including hedging activities)
for natural gas averaged $4.20 per thousand cubic feet (mcf), up from $3.65
during the prior year's second quarter. The company's second quarter 2005
worldwide liquids price realizations (including hedging activities) were $47.94
per barrel, up from $32.61 in the second quarter 2004. Hedging activities in
the 2005 second quarter decreased worldwide liquids realizations by 24 cents per
barrel and had no impact on worldwide natural gas realizations.
Unocal's preliminary EBITDAX for the second quarter 2005 was $1.18 billion, or
$4.28 per share (diluted). This compares with $762 million, or $2.74 per share
(diluted), for the same period in 2004. EBITDAX is net earnings before interest,
taxes, depreciation, depletion and amortization, impairments, exploration
expenses, dry hole costs, special items, and the cumulative effect of accounting
changes.
Six-months 2005 financial and operating details
- -----------------------------------------------
Unocal's preliminary net earnings for the first six months 2005 were
$929 million, or $3.39 per share (diluted), 52 percent above the $610 million,
or $2.25 per share (diluted), reported in the same period a year ago.
Preliminary adjusted after-tax earnings for the first six months of 2005 were
also $929 million, or $3.39 per share (diluted). This compares with $470
million, or $1.75 per share (diluted), reported for the first six months of
2004. All of the special items are detailed in the
4
Adjusted After-tax Earnings Reconciliation table included at the end of this
news release.
CONSOLIDATED RESULTS (UNAUDITED)
For the Six Months
Millions of dollars except Ended June 30,
per share amounts 2005 2004
Earnings from continuing operations $872 $522
Earnings from discontinued operations 57 88
Net earnings 929 610
Less: Special items in continuing
operations (14) 84
Less: Special items in
discontinued operations 14 56
Adjusted after-tax earnings $929 $470
DILUTED EARNINGS PER SHARE DATA
(UNAUDITED)
Net earnings per share:
Continuing operations $3.18 $1.93
Discontinued operations 0.21 0.32
Total net earnings per share $3.39 $2.25
Adjusted after-tax earnings per share $3.39 $1.75
REVENUES FROM CONTINUING OPERATIONS
(UNAUDITED) $4,281 $3,633
Full-year 2005 production outlook
- ----------------------------------
Unocal currently expects worldwide average production for the full-year 2005 to
exceed 430,000 BOE per day, compared with 440,000 BOE per day that was
previously estimated. The change reflects the expected loss of production from
the planned sale of Unocal's Northrock subsidiary in the third quarter 2005.
The company's updated 2005 net production outlook can be found in the Data
Warehouse section of Unocal's Investor Relations web site, www.unocal.com.
This document provides additional detailed estimated ranges for the numerous
areas of production, which describe the company's lowest and highest production
estimates in those areas. In locations where Unocal is limited by market demand
or pipeline capacity, the range is between the contract minimum and the highest
past production or the estimated capacity limits of the producing assets.
A sensitivity factor is provided to adjust future production for the impacts of
PSC adjustments due to changes in oil prices.
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 Asia and North America.
Financial database
- ------------------
Additional financial tables for the second quarter 2005 and the comparable prior
periods are available in the company's "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.
* * * * *
5
Forward-Looking Statements; Preliminary 2005 Second Quarter and Six-Months
Results
- -------
This news release contains forward-looking statements about matters such as
Unocal's merger with Chevron, the pending sale of Unocal's western Canada
exploration and production business, drilling, development and other plans for
future operations, and production rates and timing. Although these statements
are based upon Unocal's current expectations and beliefs, they are subject to
known and unknown risks and uncertainties that could cause actual results and
outcomes to differ materially from those described in, or implied by, the
forward-looking statements, including stockholder approval of the Chevron merger
and the effects on Unocal in the event that the Chevron merger is not completed;
uncertainty as a result of the competing CNOOC Ltd. acquisition proposal;
volatility in commodity prices; Unocal's ability to find or acquire commercially
productive reservoirs and to develop and produce deepwater and other projects in
a timely and cost-effective manner; the accuracy of Unocal's estimates and
judgments regarding hydrocarbon resources and formations and reservoir
performance; operational risks inherent in the exploration, development and
production of oil and gas; the impact of environmental laws, permitting and
licensing requirements and other regulations; international and domestic
political and economic factors; and other factors discussed in Unocal's 2004
Annual Report on Form 10-K and subsequent reports filed or furnished by Unocal
with the U.S. Securities and Exchange Commission (SEC).
Copies of Unocal's SEC filings are available from Unocal 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. Unocal undertakes no obligation to update the
forward-looking statements in this news release to reflect future events or
circumstances. All such statements are expressly qualified by this cautionary
statement, which is provided pursuant to the safe harbor provisions of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934.
In addition, disclosures in this news release, including in the attached tables,
regarding Unocal's second quarter and first six months of 2005 financial results
are preliminary and are subject to change in connection with Unocal's
preparation and filing of its Form 10-Q for the three months ended
June 30, 2005.
Supplemental Non-GAAP Financial Measures
- ----------------------------------------
The news release includes certain "non-GAAP financial measures" as defined under
SEC regulations: (1) adjusted after-tax earnings (net earnings excluding special
items and cumulative effects of accounting changes) and (2) EBITDAX (net
earnings before interest, taxes, depreciation, depletion and amortization, asset
impairments, exploration expenses, dry hole costs, special items and cumulative
effects of accounting changes).
Special items represent certain significant matters which positively or
negatively impact net earnings and that management determines to be not
representative of the company's ongoing operations. Examples include: gain/loss
from major asset sales; environmental remediation costs related primarily 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 that adjusted after-tax earnings is a useful
supplemental financial measure to investors and analysts because it facilitates
a focus on the company's ongoing operations and allows for convenient
comparisons to the company's prior reporting periods. Adjusted after-tax
earnings is also used as a factor in calculating various performance measures in
connection with payments under the company's annual bonus plan, and it is used
by management as a factor in reviewing business unit performance. Unocal's
management believes that EBITDAX 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.
6
Adjusted after-tax earnings and EBITDAX are not substitutes for net earnings
determined in accordance with GAAP as a measure of profitability or other GAAP
financial measures. Special items excluded from these non-GAAP measures do in
fact positively or negatively impact net earnings. Other companies may define
special items differently, and the Thomson/First Call mean of analyst estimates
may not use a similar definition. Hence, these measures may not be comparable
with similarly titled amounts reported by other companies or analyst estimates
reported by Thomson/First Call.
A quantitative historical 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) For the For the
Three Months Six Months
Millions of dollars except Ended June 30, Ended June 30,
per share amounts 2005 2004 2005 2004
Revenues
Sales and operating revenues (a) $2,161 $1,799 $4,200 $3,519
Interest, dividends and miscellaneous
income 42 19 51 30
Gain on sales of assets 10 40 30 84
Total revenues 2,213 1,858 4,281 3,633
Costs and other deductions
Crude oil, natural gas and product
purchases (a) 748 729 1,478 1,452
Operating expense 324 350 610 609
Administrative and general expense 66 46 144 109
Depreciation, depletion and
amortization 269 213 512 416
Impairments 1 9 1 14
Dry hole costs 12 36 31 59
Exploration expense 36 41 66 85
Interest expense 32 46 65 87
Property and other operating taxes 29 22 50 42
Total costs and other deductions 1,517 1,492 2,957 2,873
Earnings from equity investments 18 38 57 75
Earnings from continuing operations
before income taxes and minority
interests 714 404 1,381 835
Income taxes 272 138 505 309
Minority interests 2 (1) 4 4
Earnings from continuing operations 440 267 872 522
Earnings from discontinued operations (b) 35 74 57 88
Net earnings $475 $341 $929 $610
Basic earnings per share of common
stock (c)
Continuing operations $1.62 $1.00 $3.22 $1.98
Discontinued operations 0.13 0.29 0.21 0.34
Net earnings $1.75 $1.29 $3.43 $2.32
Diluted earnings per share of common
stock (d)
Continuing operations $1.60 $0.98 $3.18 $1.93
Discontinued operations 0.13 0.27 0.21 0.32
Net earnings $1.73 $1.25 $3.39 $2.25
(a) Includes crude oil buy/sell
transactions settled in cash of: $197 $210 $360 $462
(b) Net of tax expense (benefit) $30 $36 $48 $46
(c) Basic weighted average shares
outstanding (in thousands) 271,993 263,916 271,219 262,945
(d) Diluted weighted average shares
outstanding (in thousands) 274,811 277,754 274,057 277,232
7
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
At June 30, At December 31,
Millions of dollars 2005 2004
Assets
Cash and cash equivalents $1,775 $1,160
Assets held for sale 1,372 --
Other current assets - net 1,551 1,770
Investments and long-term receivables - net 720 777
Properties - net 7,806 8,819
Goodwill 81 136
Other assets 464 439
Total assets $13,769 $13,101
Liabilities and Stockholders' Equity
Liabilities of assets held for sale $411 $--
Other current liabilities (a) 2,345 2,581
Long-term debt and capital leases 2,076 2,571
Deferred income taxes 591 839
Accrued abandonment, restoration and
environmental liabilities 866 897
Other deferred credits and
liabilities 1,093 969
Minority interests 29 27
Stockholders' equity 6,358 5,217
Total liabilities and
stockholders' equity $13,769 $13,101
(a) Includes current portion of
Long-term debt and capital leases of: 464 491
8
CONSOLIDATED CASH FLOWS (UNAUDITED) For the Six Months
Ended June 30,
Millions of dollars 2005 2004
Cash Flows from Operating Activities
Net earnings $929 $610
Adjustments to reconcile net earnings
to net cash provided by operating
activities
Depreciation, depletion and
amortization 567 472
Impairments 1 14
Dry hole costs 32 65
Amortization of exploratory
leasehold costs 22 32
Deferred income taxes 119 (6)
Gain on sales of assets (30) (84)
Gain on disposal of
discontinued operations (23) (84)
Pension expense net of
contributions 47 44
Other (10) (51)
Working capital and other changes
related to operations (22) 114
Net cash provided by
operating activities 1,632 1,126
Cash Flows from Investing Activities
Capital expenditures (includes dry
hole costs) (873) (801)
Proceeds from sales of assets 117 158
Proceeds from sales of
discontinued operations 47 120
Return of capital from affiliate
company -- 48
Net cash used in
investing activities (709) (475)
Cash Flows from Financing Activities
Long-term borrowings 1 135
Reduction of long-term debt and
capital lease obligations (291) (241)
Minority interests (3) (1)
Repurchases of common stock -- (20)
Proceeds from issuance of common
stock 120 94
Dividends paid on common stock (107) (105)
Loans to key employees -- 24
Other -- (2)
Net cash used in financing
activities (280) (116)
Total increase in cash and cash
equivalents 643 535
Less: cash and cash equivalents of
assets held for sale 28 --
Cash and cash equivalents at
beginning of year 1,160 404
Cash and cash equivalents at end of
period $1,775 $939
9
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT (UNAUDITED)
2nd Q 2005 1st Q 2005
Adjusted Adjusted
Net After-Tax Net After-Tax
Millions of dollars Earnings Earnings (a) Earnings Earnings (a)
Exploration and
Production
North America
U.S. $146 $146 $154 $154
Canada -- -- 1 1
Total North America 146 146 155 155
International
Asia 294 294 251 229
Other 53 53 48 48
Total International 347 347 299 277
Total Exploration and
Production 493 493 454 432
Midstream and Marketing 20 20 35 35
Geothermal 17 17 17 17
Corporate and Other
Administrative and
General (28) (28) (29) (29)
Interest Expense - Net (21) (21) (15) (15)
Environmental and
Litigation (27) (3) (12) (2)
Other (14) (13) (18) (17)
After-tax earnings from
continuing operations 440 465 432 421
After-tax earnings from
discontinued operations 35 23 22 20
After-tax earnings $475 $488 $454 $441
(a) For a reconciliation to net earnings, see the Adjusted After-Tax
Earnings Reconciliation table.
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT (UNAUDITED)
2nd Q 2005 2nd Q 2004
Adjusted Adjusted
Net After-Tax Net After-Tax
Millions of dollars Earnings Earnings (a) Earnings Earnings (a)
Exploration and
Production
North America
U.S. $146 $146 $108 $86
Canada -- -- -- --
Total North America 146 146 108 86
International
Asia 294 294 137 137
Other 53 53 29 29
Total International 347 347 166 166
Total Exploration and
Production 493 493 274 252
Midstream and Marketing 20 20 18 18
Geothermal 17 17 57 11
Corporate and Other
Administrative and
General (28) (28) (21) (21)
Interest Expense - Net (21) (21) (33) (33)
Environmental and
Litigation (27) (3) (11) (3)
Other (14) (13) (17) (11)
After-tax earnings from
continuing operations 440 465 267 213
After-tax earnings from
discontinued operations 35 23 74 18
After-tax earnings $475 $488 $341 $231
(a) For a reconciliation to net earnings, see the Adjusted After-Tax
Earnings Reconciliation table.
10
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS
BY BUSINESS SEGMENT (UNAUDITED)
For the Six Months Ended June 30,
2005 2005 2004 2004
Adjusted Adjusted
Net After-Tax Net After-Tax
Millions of dollars Earnings Earnings (a) Earnings Earnings (a)
Exploration and
Production
North America
U.S. $300 $300 $221 $178
Canada 1 1 -- --
Total North America 301 301 221 178
International
Asia 545 523 295 295
Other 101 101 46 46
Total International 646 624 341 341
Total Exploration and
Production 947 925 562 519
Midstream and Marketing 55 55 41 41
Geothermal 34 34 94 27
Corporate and Other
Administrative and
General (57) (57) (48) (48)
Interest Expense - Net (36) (36) (65) (65)
Environmental and
Litigation (39) (5) (27) (8)
Other (32) (30) (35) (28)
After-tax earnings from
continuing operations 872 886 522 438
After-tax earnings from
discontinued operations 57 43 88 32
After-tax earnings $929 $929 $610 $470
(a) For a reconciliation to net earnings, see the Adjusted After-Tax
Earnings Reconciliation table.
For the For the
Operating Highlights Three Months Six Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
North America Net Daily Production
Liquids (thousand barrels)
U.S. 61 55 59 55
Canada 14 15 15 16
Total liquids 75 70 74 71
Natural gas - dry basis
(million cubic feet)
U.S. 442 511 448 512
Canada 83 83 83 83
Total natural gas 525 594 531 595
North America Average Prices
(excluding hedging activities) (a)
Liquids (per barrel)
U. S. $48.72 $35.91 $46.60 $33.66
Canada $37.67 $29.89 $38.00 $29.17
Average $46.56 $34.58 $44.85 $32.66
Natural gas (per mcf)
U. S. $5.91 $4.80 $5.68 $5.20
Canada $6.35 $5.40 $6.02 $5.37
Average $5.98 $4.88 $5.74 $5.23
North America Average Prices
(including hedging activities) (a)
Liquids (per barrel)
U. S. $48.04 $30.52 $46.39 $29.64
Canada $37.67 $29.89 $38.00 $29.17
Average $46.02 $30.38 $44.68 $29.54
Natural gas (per mcf)
U. S. $5.89 $4.53 $6.02 $5.34
Canada $6.35 $5.08 $6.02 $5.06
Average $5.97 $4.61 $6.02 $5.30
(a) Excludes gains/losses on derivative positions not accounted for as
hedges and ineffective portions of hedges.
11
Operating Highlights (continued) For the For the
Three Months Six Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
International Net Daily Production (a)
Liquids (thousand barrels)
Asia 74 61 75 64
Other (b) 28 20 24 20
Total liquids 102 81 99 84
Natural gas - dry basis
(million cubic feet)
Asia 1,156 891 1,083 885
Other (b) 10 31 10 28
Total natural gas 1,166 922 1,093 913
International Average Prices (c)
Liquids (per barrel)
Asia $49.77 $34.02 $47.63 $32.66
Other $48.31 $36.01 $47.74 $34.30
Average $49.43 $34.52 $47.66 $33.02
Natural gas (per mcf)
Asia $3.38 $3.02 $3.39 $2.99
Other $5.45 $4.01 $5.35 $4.17
Average $3.40 $3.03 $3.41 $3.01
Worldwide Net Daily Production (b)
Liquids (thousand barrels) 177 151 173 155
Natural gas - dry basis
(million cubic feet) 1,691 1,516 1,624 1,508
Barrels oil equivalent (thousands) 459 404 444 406
Worldwide Average Prices (excluding
hedging activities) (d)
Liquids (per barrel) $48.18 $34.55 $46.43 $32.86
Natural gas (per mcf) $4.20 $3.76 $4.17 $3.89
Worldwide Average Prices (including
hedging activities) (d)
Liquids (per barrel) $47.94 $32.61 $46.35 $31.41
Natural gas (per mcf) $4.20 $3.65 $4.26 $3.92
(a) International production is
presented utilizing the
economic interest method.
(b) Includes proportional interests
in production of equity investees
of:
Liquids -- 1 -- 1
Natural gas -- 20 -- 17
Barrels oil equivalent -- 5 -- 4
(c) International did not have any
hedging activities.
(d) Excludes gains/losses on
derivative positions not
accounted for as hedges
and ineffective portions
of hedges.
12
ADJUSTED AFTER-TAX EARNINGS RECONCILIATION (UNAUDITED)
Millions of dollars except 2nd Q 1st Q 2nd Q
per share amounts 2005 2005 2004
Net earnings $475 $454 $341
Less: Special items from continuing
operations
E&P - North America - U.S.
Asset sales -- -- 22
E&P - International - Asia
Asset sales -- 22 --
Geothermal
PGI settlement -- -- 46
Corporate and Other
Environmental and litigation
provisions (25) (11) (13)
Net tax adjustments for
settlements / assessments -- -- 27
Restructuring provisions -- -- 1
Provision related to Agrium
arbitration settlement -- -- (29)
Less: Special items from discontinued
operations
Gain on asset disposals 12 2 56
Adjusted after-tax earnings $488 $441 $231
Adjusted after-tax earnings per
share (diluted) $1.77 $1.62 $0.86
ADJUSTED AFTER-TAX EARNINGS RECONCILIATION (UNAUDITED)
For the Six Months
Millions of dollars except Ended June 30,
per share amounts 2005 2004
Net earnings $929 $610
Less: Special items from continuing
operations
E&P - North America - U.S.
Asset sales -- 28
Litigation provisions /
settlements -- 15
E&P - International - Asia
Asset sales 22 --
Geothermal
Asset sales -- 21
PGI settlement -- 46
Corporate and Other
Environmental and litigation
provisions (36) (25)
Net tax adjustments for
settlements / assessments -- 27
Restructuring provisions -- 1
Provision related to Agrium
arbitration settlement -- (29)
Less: Special items from discontinued
operations
Gain on asset disposals 14 56
Adjusted after-tax earnings $929 $470
Adjusted after-tax earnings per
share (diluted) $3.39 $1.75
13
EBITDAX RECONCILIATION (UNAUDITED)
Millions of dollars except 2Q Six Months
per share amounts 2005 2004 2005 2004
Net Earnings $475 $341 $929 $610
Less:
Special items from continuing
operations (25) 54 (14) 84
Special items from discontinued
operations 12 56 14 56
Adjusted after-tax earnings 488 231 929 470
Add-backs to adjusted after-tax
earnings:
Depreciation, depletion and
amortization 291 240 567 472
Impairments 1 9 1 14
Dry hole costs 12 40 32 65
Exploration expenses (including
amortization of
undeveloped leasehold costs) 41 48 79 98
Current income taxes 220 126 443 267
Deferred income taxes 91 22 139 45
Interest expense (a) 32 46 65 87
EBITDAX $1,176 $762 $2,255 $1,518
EBITDAX per share (diluted) $4.28 $2.74 $8.23 $5.48
(a) Net of capitalized interest of: 14 10 29 26
#####