SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) September 16, 1998
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UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
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(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
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(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
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(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events.
GROWTH, THIRD QUARTER 1998 EARNINGS OUTLOOK, AND CAPITAL EXPENDITURES FORECAST
On September 29, 1998, Unocal Corporation announced that it continues to make
progress on its long-term growth program despite depressed near-term prices for
crude oil and natural gas.
Unocal has focused its growth efforts on exploration and production projects in
the Gulf of Mexico and Southeast Asia. In addition, Unocal is pursuing other
high-value, market-to-resource project opportunities in key areas of growth.
Recently, Unocal discovered two potentially significant new deepwater fields in
Indonesia, and additional prospects will be explored on the company's 2.1
million-acre Indonesian deepwater holdings.
Unocal's Spirit Energy 76 unit has recorded 24 discoveries so far this year,
double the exploration successes for all of 1997. Unocal has positioned itself
in the deepwater Gulf of Mexico with interests in 196 blocks, including 62
apparent high bids in the August lease sale.
While oil and gas prices are likely to remain under pressure for some time,
Unocal believes its low-cost drilling and operating capabilities will enable it
to weather a sustained commodity price slump. The company's aggressive growth
program will result in increased levels of exploration and dry hole expenses.
These higher expenses, when combined with current low commodity prices, serve to
depress current earnings.
For example, Spirit Energy 76's estimated average natural gas price realization
was $1.58 per thousand cubic feet (mcf) for September, and about $1.98 per mcf
for the third quarter, 8 percent below the second quarter. At the same time,
Spirit Energy's exploration expense in the third quarter is about 70 percent
above the second quarter level. In addition, the recent storms have had a
significant impact on Unocal's production in the Gulf of Mexico.
The combined impact of low prices, storms and higher growth-related expenses,
coupled with lower Diversified Business Group earnings and increased net
interest expense, will result in third quarter 1998 adjusted earnings from
continuing operations below 10 cents per share, the low end of the current range
of analyst estimates. The adjusted earnings estimate excludes special items that
may be recorded in the quarter.
Unocal recorded adjusted earnings from continuing operations of 26 cents per
share (diluted) in the second quarter 1998. The latest First Call Corporate
Monitor analyst estimates for Unocal's third quarter ranged from 10 to 25 cents
per share, with a consensus of 20 cents. Unocal recorded adjusted earnings from
continuing operations of 38 cents per share (diluted) in the third quarter of
1997.
Although Unocal currently expects to have positive earnings for the quarter,
extreme price volatility and timing of dry holes make it difficult to project an
exact number. While the company cannot control prices, it will continue to
aggressively lower costs.
The company's third quarter 1998 earnings could also be affected by significant
dry hole expenses that might be recorded before the closing for the quarter.
The company expects its 1998 capital spending to total about $1.6 billion, up
from an earlier forecast of $1.5 billion. The higher capital spending reflects
Unocal's recent successful bidding for offshore leases in the Gulf of Mexico and
development of international growth projects. The increase in capital spending
is expected to be funded from a combination of asset sales proceeds and
increased debt.
Forward-looking statements and estimates regarding future earnings, expenses,
and capital expenditures, as well as future exploration and development
activities set forth above are based on assumptions concerning commodity prices,
regulatory actions, economic conditions, market conditions, operational concerns
and other considerations. Actual results could differ materially.
LEGAL PROCEEDING
The Office of the District Attorney of San Bernardino County, California, has
recently advised Unocal's Molycorp, Inc., subsidiary of the suspension of
settlement discussions of a criminal investigation arising from wastewater
pipeline incidents which occurred in 1996 at Molycorp's Mountain Pass,
California, lanthanide facility. The Office advised Molycorp that a grand jury
will be convened to investigate the matter and that two Molycorp employees also
have been named as targets. To Molycorp's knowledge, the grand jury has not yet
been convened.
NOMINATIONS AND OTHER PROPOSALS FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
Attached as Exhibit 3 to this Report is a copy of Unocal's Bylaws, as amended
September 16, 1998. Section 7 of Article III of the Bylaws, as amended,
generally requires 90 days' advance notice of, and specified information with
respect to, nominations by stockholders of persons for election as directors and
other business proposed to be brought before a stockholders' meeting by a
stockholder.
Unocal's 1999 Annual Meeting of Stockholders is scheduled to be held on May 24,
1999. Therefore, advance notice of director nominations and proposals by
stockholders intended to be presented at the 1999 Annual Meeting (other than
proposals which stockholders wish to include in the company's proxy statement
and form of proxy pursuant to Rule 14a-8 of the Securities and Exchange
Commission (the "Commission")) must be delivered to Unocal's principal office in
El Segundo, California, to the attention of the Corporate Secretary, on or
before February 23, 1999, and contain the information specified in Section 7 of
Article III of the Bylaws.
As previously stated in Unocal's Proxy Statement for its 1998 Annual Meeting of
Stockholders, stockholder proposals for inclusion in Unocal's Proxy Statement
and form of proxy for its 1999 Annual Meeting, pursuant to Rule 14a-8 of the
Commission, must be received by the Corporate Secretary at Unocal's principal
office in El Segundo, California, on or before December 21, 1998.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
3 Bylaws of Unocal Corporation, as amended September
16, 1998, and currently in effect.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNOCAL CORPORATION
(Registrant)
Date: September 29, 1998 By: /s/ JOE D. CECIL
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Joe D. Cecil
Vice President and Comptroller
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