Union Pacific Resources Group Inc.
801 Cherry Street
Fort Worth, Texas 76102-6803
[UNION PACIFIC RESOURCES
News Release GROUP INC. LOGO]
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
Analyst and media contact:
Mike Liebschwager
Manager, Investor Relations
817/877-6531
UNION PACIFIC RESOURCES GROUP INC.
REPORTS AN 18 PERCENT INCREASE IN THIRD QUARTER
EARNINGS TO $.31 CENTS PER SHARE
Fort Worth, TX -- (October 14, 1996) -- Union Pacific Resources Group Inc.
(UPR) today reported operating revenues and net income for the quarter ended
September 30, 1996, of $447.1 million and $76.9 million, respectively. For the
same period last year, on a pro forma basis, operating revenues and net income
were $335.3 million and $65.2 million, respectively. Discretionary cash flow for
the quarter increased 42 percent to $251.3 million, compared to $177.1 million,
on a pro forma basis, for the same period in 1995. Earnings per share for the
third quarter 1996 were $.31, compared to pro forma per share earnings of $.26
for the third quarter 1995. Last year's results are reported on a pro forma
basis due to UPR's initial public offering completed in October 1995.
Sales volumes for the third quarter 1996 were 1,727 million cubic feet of
natural gas equivalent per day (MMcfed). This represents a nine percent increase
from the same period last year, primarily as a result of volume increases in the
Company's Austin Chalk and West Texas business units.
Average product price realizations for the quarter were up 26 percent from
the same period last year, $2.09 per Mcfe in 1996 versus $1.66 per Mcfe in 1995.
Natural gas price realizations were up 27 percent. Crude oil price realizations
were up 19 percent and plant liquids realizations increased 39 percent.
Austin Chalk sales volumes increased 19 percent to 642 MMcfed in the
quarter -- the tenth consecutive record quarter for this business unit. During
the quarter, three significant wells were completed in the Chalk.
-more-
-2-
The Neumann Unit #1 located in Washington County, Texas, was completed
August 14, 1996, as a single lateral horizontal and is producing 58 MMcfd of
natural gas. UPR has a 100 percent working interest in the well and currently
has five rigs drilling in Washington County which contains part of the deep
Giddings gas field. In addition, the Crosby Land and Resources 21-1, which is a
dual lateral horizontal well located in Vernon Parish, Louisiana, recently was
completed and produced 10 MMcfd of natural gas and 1,700 barrels of oil per day
(BOPD) during an extended test. UPR is the operator and has a 37.5 percent
working interest in the well. In Rapides Parish, Louisiana, the Company
participated in the Exxon Minerals A-1, operated by OXY USA, Inc. This well is
producing 5,000 BOPD and 14 MMcfd of natural gas. UPR holds a 33 percent working
interest. UPR now has five operated rigs drilling in the Louisiana extension of
the Austin Chalk. The Company plans to invest approximately $115 million during
1996 in this region.
"Tomorrow, the spinoff of UPR from Union Pacific Corporation will be
completed," said Jack L. Messman, chairman of the board of directors and chief
executive officer, UPR. "In conjunction with our spinoff, Standard and Poor's
will add UPR to the S&P 500 Index after the close of trading on Tuesday, October
15, 1996. The S&P 500 is widely considered to be a key barometer of stock market
activity and corporate performance benchmarks for professional money managers."
Union Pacific Resources Group Inc. (NYSE-UPR) is one of the nation's
largest independent oil and gas exploration and production companies. The
company is the nation's #1 driller and currently is majority-owned by Union
Pacific Corporation (NYSE-UNP) of Bethlehem, PA. Union Pacific Corporation will
distribute its remaining shares of UPR common stock via a special tax-free stock
dividend payable October 15, 1996.
---------------
This press release, other than historical financial information,
consists of forward looking statements that involve risks and
uncertainties including planned drilling activity, expected production
efforts and volumes and budgeted capital expenditures and other risks
and uncertainties detailed in the Company's SEC reports, including the
report on Form 10-Q for the quarter ended June 30, 1996. Actual results
may vary materially.
-more-
-3-
Union Pacific Resources Group Inc.
Statement of Income
For the Period Ended September 30
(Dollars in Millions, Except Per Share Figures)
Pro
Third Quarter Forma
1996 1995 (1) 1995 (2)
---------------- -------
Operating revenues:
Oil and gas operations:
Producing properties $280.8 $211.4 $211.4
Plants, pipelines and marketing 124.2 83.5 83.5
Other oil and gas revenues 6.8 10.9 10.9
---------------- ------
Total oil and gas operations 411.8 305.8 305.8
Minerals 35.3 29.5 29.5
---------------- ------
Total operating revenues 447.1 335.3 335.3
---------------- ------
Operating expenses:
Production 63.4 41.9 41.9
Exploration 32.2 21.8 21.8
Plants, pipelines and marketing 72.6 45.4 45.4
Minerals 2.3 2.1 2.1
Depreciation, depletion and amortization 132.9 114.0 114.0
General and administrative 16.4 11.7 14.0
---------------- ------
Total operating expenses 319.8 236.9 239.2
---------------- ------
Operating income 127.3 98.4 96.1
Other income (expense) -- net (2.4) 3.7 2.5
Interest expense -- net (12.5) (0.8) (15.6)
---------------- ------
Income before income taxes 112.4 101.3 83.0
Income taxes (35.5) (24.6) (17.8)
---------------- ------
Net income $76.9 $76.7 $65.2
================ ======
EBITDAX (3) $292.4 $234.2 $231.9
================ ======
Earnings per share $0.31 n/a $0.26
Average shares outstanding (millions) 249.8 249.7
(1) Certain prior year amounts have been reclassified to conform to the current
presentation. Such reclassifications have no effect on operating income or
net income.
(2) Pro forma adjustments reflect interest expense related to debt incurred at
the time of the Company's initial public offering in October 1995, and other
costs associated with being a stand-alone entity, as if such costs had been
incurred from the beginning of 1995.
(3) "EBITDAX" for any period means the sum of operating income; depreciation,
depletion and amortization; and exploration expenses.
-more-
-4-
Union Pacific Resources Group Inc.
Statement of Income
For the Period Ended September 30
(Dollars in Millions, Except Per Share Figures)
Pro
Nine Months Forma
1996 1995 (1) 1995 (2)
----------------- -------
Operating revenues:
Oil and gas operations:
Producing properties $780.6 $632.3 $632.3
Plants, pipelines and marketing 364.0 246.2 246.2
Other oil and gas revenues 23.5 38.1 38.1
----------------- -------
Total oil and gas operations 1,168.1 916.6 916.6
Minerals 96.6 84.7 84.7
----------------- -------
Total operating revenues 1,264.7 1,001.3 1,001.3
----------------- -------
Operating expenses:
Production 189.8 157.3 157.3
Exploration 94.1 64.3 64.3
Plants, pipelines and marketing 199.0 132.0 132.0
Minerals 6.1 6.6 6.6
Depreciation, depletion and amortization 384.1 333.5 333.4
General and administrative 46.9 34.6 41.5
----------------- -------
Total operating expenses 920.0 728.3 735.2
----------------- -------
Operating income 344.7 273.0 266.1
Other income (expense) -- net (1.9) 3.4 (0.4)
Interest expense -- net (38.0) (3.4) (48.0)
----------------- -------
Income before income taxes 304.8 273.0 217.7
Income taxes (98.3) (61.5) (40.7)
----------------- -------
Net income $206.5 $211.5 $177.0
================= =======
EBITDAX (3) $822.9 $670.8 $663.9
================= =======
Earnings per share $0.83 n/a $0.71
Average shares outstanding (millions) 249.8 249.7
(1) Certain prior year amounts have been reclassified to conform to the current
presentation. Such reclassifications have no effect on operating income or
net income.
(2) Pro forma adjustments reflect interest expense related to debt incurred at
the time of the Company's initial public offering in October 1995, and other
costs associated with being a stand-alone entity, as if such costs had been
incurred from the beginning of 1995.
(3) "EBITDAX" for any period means the sum of operating income; depreciation,
depletion and amortization; and exploration expenses.
-more-
-5-
Union Pacific Resources Group Inc.
Operating Statistics
For the Period Ended September 30
Third Quarter Nine Months
1996 1995 (1) 1996 1995 (1)
----------------- -----------------
Combined Oil and Gas Operations
Average daily sales volumes:
Natural gas (MMcfd) 1,013.8 947.9 991.3 929.5
Natural gas liquids (MBbld) 67.9 55.9 67.1 56.2
Crude oil (MBbld) 51.0 50.3 50.7 53.7
Total (MMcfed) 1,727.3 1,585.4 1,698.3 1,589.3
Average sales prices:
Natural gas (per Mcf) $1.78 $1.40 $1.69 $1.39
Natural gas liquids (per Bbl) 12.05 8.65 11.01 8.83
Crude oil (per Bbl) 19.12 16.13 18.58 16.15
Total (per Mcfe) 2.09 1.66 1.98 1.67
Operations Detail
Producing properties:
Average daily production:
Natural gas (MMcfd) 981.5 919.9 963.7 905.5
Natural gas liquids (MBbld) 29.2 22.9 27.7 23.0
Crude oil (MBbld) 51.0 50.3 50.7 53.7
Total (MMcfed) 1,462.8 1,359.4 1,434.0 1,365.9
Average sales prices:
Natural gas (per Mcf) $1.78 $1.41 $1.69 $1.39
Natural gas liquids (per Bbl) 11.13 8.25 10.08 8.15
Crude oil (per Bbl) 19.12 16.13 18.58 16.15
Average costs:
Production costs (per Mcfe) $0.47 $0.33 $0.48 $0.42
DD&A (per Mcfe) 0.85 0.80 0.85 0.78
General and administrative cost
(per Mcfe) (1) 0.10 0.10 0.10 0.10
Plants, pipelines and marketing:
Average daily sales volumes attributable
to gas plant ownership:
Natural gas (MMcfd) 32.3 28.0 27.6 24.0
Natural gas liquids (MBbld) 38.7 33.0 39.5 33.2
Total (MMcfed) 264.5 225.9 264.4 223.4
Average sales prices:
Natural gas (per Mcf) $1.79 $1.20 $1.85 $1.45
Natural gas liquids (per Bbl) 12.74 8.94 11.66 9.28
(1) Certain prior year amounts have been restated to conform to the current
presentation. General and administrative costs per Mcfe for 1995 have been
calculated on a pro forma basis to reflect additional administrative costs
associated with being a stand-alone entity. See note (2) on page 3.
-more-
-6-
Union Pacific Resources Group Inc.
Statement of Cash Flows
For the Period Ended September 30
(Dollars in Millions)
Third Quarter Nine Months
1996 1995 1996 1995
--------------- ---------------
Cash provided by operations:
Net income $76.9 $76.7 $206.5 $211.5
Depreciation, depletion and
amortization 132.9 114.0 384.1 333.5
Exploration expenses 32.2 21.8 94.1 64.3
Deferred taxes 9.3 (23.9) 25.5 (15.5)
--------------- ---------------
Discretionary cash flow 251.3 188.6 710.2 593.8
Working capital changes and other 69.4 (74.8) 19.5 (22.7)
--------------- ---------------
Cash provided by operations 320.7 113.8 729.7 571.1
--------------- ---------------
Cash used by investing activities:
Capital investments and exploratory
expenditures (247.8) (168.8) (615.7) (535.5)
Proceeds from sales of assets -- 6.0 24.9 43.0
Other investing activities -- net (1.8) -- (1.8) 0.1
--------------- ---------------
Cash used by investing activities (249.6) (162.8) (592.6) (492.4)
--------------- ---------------
Financing activities:
Dividends paid (12.4) (31.0) (37.3) (93.0)
Advances from (to) Union Pacific
Corporation (40.5) 75.3 (123.4) 75.7
Other financings -- net (11.0) (4.3) 23.4 (57.4)
--------------- ---------------
Cash provided (used) by financing
activities (63.9) 40.0 (137.3) (74.7)
--------------- ---------------
Net change in cash $7.2 ($9.0) ($0.2) $4.0
=============== ===============
-more-
-7-
Union Pacific Resources Group Inc.
Statement of Financial Position
As of September 30
(Dollars in Millions)
1996 1995
-------- --------
Assets:
Current assets $340.2 $356.9
Properties -- net 2,911.5 2,745.1
Other assets 115.4 102.9
-------- --------
Total $3,367.1 $3,204.9
======== ========
Liabilities and shareholders' equity:
Note payable to and advances from Union Pacific
Corporation -- net $444.4 $16.3
Other current liabilities 471.5 378.0
Debt due after one year 127.2 33.5
Deferred income taxes 463.9 442.6
Other liabilities 375.5 377.4
Shareholders' equity 1,484.6 1,957.1
-------- --------
Total $3,367.1 $3,204.9
======== ========
-end-