Exhibit 99.2
UNION TEXAS PETROLEUM (LETTERHEAD)
NEWS RELEASE
CONTACT: CAROL L. COX
(713) 968-2714
UNION TEXAS PETROLEUM'S 1996 THIRD QUARTER EARNINGS
PER SHARE ARE TRIPLED FROM YEAR-AGO LEVELS
Houston, October 23, 1996 -- Union Texas Petroleum Holdings, Inc.
(NYSE:UTH) today reported significantly higher results for the third quarter of
1996, with earnings of 39 cents per share compared to 13 cents per share in
1995's same period. Net income for 1996's third quarter was $34 million, up from
$12 million in the same period a year ago.
Union Texas also recorded substantially higher results for 1996's first
nine months compared to a year ago, with earnings of $1.28 per share in 1996's
first nine months versus 89 cents per share in 1995's same period. Net income
for 1996's first nine months was $112 million, up from $79 million in 1995's
corresponding period.
HIGHER OIL PRICES, INCREASED LNG SALES PRICES AND VOLUMES
Chairman and CEO John Whitmire said that Union Texas' higher earnings for
1996's third quarter were driven primarily by higher worldwide oil prices,
increased sales prices and volumes of liquefied natural gas (LNG) in Indonesia,
and lower exploration expense, which were partially offset by lower U.K. North
Sea oil volumes, decreased U.S. ethylene margins and costs associated with a
voluntary retirement program.
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Sales and operating revenues for 1996's third quarter totaled $227 million,
up 15% from $197 million a year ago, due largely to increased oil prices and
higher LNG prices and volumes.
"During the third quarter of 1996, we benefited from a 29% rise in our
worldwide oil prices over 1995's same period, averaging $19.56 per barrel in
1996's third quarter versus $15.16 per barrel a year ago. Our LNG operations in
Indonesia saw a 19% gain in sales prices and a 16% increase in volumes over
year-ago levels," said Whitmire. Union Texas said that its LNG sales price will
average $3.72 per thousand cubic feet in October 1996. Union Texas and its
co-venturers supply natural gas to the Indonesian government-owned LNG plant at
Bontang Bay in East Kalimantan, which is the largest operating LNG facility in
the world.
In the U.K. North Sea, Union Texas said its oil sales volumes were down by
about 20% during 1996's third quarter from year-ago levels due largely to a
temporary shutdown of the Alba oil field during facilities construction and
field development activity which are expected to boost Alba's production
capacity from 75,000 gross barrels a day to 100,000 barrels by year-end 1996 as
well as scheduled maintenance and normal production declines at the Piper field.
Union Texas said production at Alba has resumed. For the full-year 1996, Union
Texas expects its U.K. North Sea oil sales volumes to exceed 1995 levels.
At Union Texas' petrochemical operations in the U.S., lower ethylene
margins in 1996's third quarter versus year-ago levels were partially offset by
increased ethylene sales volumes. During 1996's third quarter, Union Texas'
ethylene margins
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averaged 8 cents per pound of ethylene, down from 14 cents a year ago, but up
from 3 cents and 6 cents in 1996's first and second quarters, respectively.
During 1996's third quarter, Union Texas offered a special, one-time
voluntary retirement program with enhanced benefits to certain eligible
employees who were already eligible to retire or were nearing eligibility. A
total of 47 employees elected to participate in the program. In 1996's third
quarter, Union Texas recorded a total of approximately $9 million in costs
associated with the voluntary retirement program. Union Texas said it expects
lower future operating expenses as a result of the voluntary retirement program.
INCREASED EARNINGS FOR 1996'S FIRST NINE MONTHS
Union Texas' performance for 1996's first nine months was favorably
affected by higher worldwide oil prices, increased oil and gas sales volumes in
the U.K. North Sea, improved LNG sales prices and volumes in Indonesia, and
lower exploration expense, which were partially offset by lower ethylene margins
and costs associated with the voluntary retirement program. Union Texas' sales
and operating revenues for the first nine months of 1996 totaled $709 million,
up 11% from $637 million a year ago.
"During the first nine months of 1996, Union Texas' assets have continued
to perform very well and to produce strong operational and financial results,"
said Whitmire. "We've seen a rise in production volumes during 1996's first nine
months over year-ago levels, primarily reflecting our Alba acquisition. We are
well on our way to exceeding 1995's record production.
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"We've also seen several other positive developments in the past few
months, including the recent announcement of plans to develop the Alpine oil
field in the Western Colville area on Alaska's North Slope, in which we have a
22% working interest. Development of the Alpine field is expected to cost $700
to $800 million gross. Union Texas has been actively exploring in the Colville
area for over 10 years, and we are very much looking forward to production from
Alpine coming onstream in early 2000. In addition, Union Texas and our
co-venturers were the high bidders on five new leases in the Colville area. In
the U.K. North Sea, the development of the Britannia gas field is proceeding on
schedule and under budget, with production expected to begin in late 1998. By
the turn of the century, Colville and Britannia are expected to contribute
approximately 25,000 net barrels of oil equivalent a day to Union Texas. This
compares to our current worldwide total production of about 133,000 net barrels
of oil equivalent a day," noted Whitmire.
"In our new exploration ventures, we currently are participating in an
important exploration well in Italy's Southern Apennines where we have a
substantial acreage position that we are working to further increase. Union
Texas also is gearing up operations for an exploration well in Eastern Indonesia
which we operate and expect to begin drilling later this year. We also are
firming up plans for two to three exploration wells in Tunisia, beginning in the
second quarter of 1997. Two of these
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wells will follow-up the offshore Ramla well, which was drilled in 1995 and
found a large oil column but lacked adequate reservoir quality. An onshore well
on the Jeffara block in Tunisia is being planned and could begin drilling in
1997. In addition, we are actively evaluating several exploration opportunities
in a number of new areas worldwide which could provide enhanced value for our
shareholders," said Whitmire.
Union Texas also said it believes its common stock continues to be
undervalued. During the first nine months of 1996, Union Texas repurchased a
total of 1,046,700 shares of common stock under its previously-announced program
to repurchase up to 2 million shares of its common stock. Union Texas has
repurchased a cumulative total of 1,601,236 shares of its common stock under the
stock repurchase program.
One of the largest independent producers located in the U.S., Houston-based
Union Texas Petroleum Holdings, Inc. (NYSE: UTH) explores for and produces oil
and gas overseas primarily in the U.K. North Sea, Indonesia and other strategic
areas. The company has petrochemical operations in Louisiana. Union Texas
celebrated its 100th anniversary in January 1996.
This news release contains forward-looking statements within the meaning of
the Securities Litigation Reform Act that involve risks and uncertainties,
including price volatility, development, operational and implementation risks,
and other factors described from time to time in the company's publicly
available SEC reports, which could cause actual results to differ materially.
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Comparative financial highlights follow (amounts in millions, except per share
data):
Three Months Ended September 30,
1996 1995
---- ----
Earnings per share . . . . . . . . . . . . . . . . . . . $0.39 $0.13
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 34 $ 12
Sales and operating revenues. . . . . . . . . . . $ 227 $ 197
Average common shares outstanding . . . . 87.0 87.8
Nine Months Ended September 30,
1996 1995
---- ----
Earnings per share . . . . . . . . . . . . . . . . . . . $ 1.28 $0.89
Net income. . . . . . . . . . . . . . . . . . . . . . . . . $ 112 $ 79
Sales and operating revenues. . . . . . . . . . . $ 709 $ 637
Average common shares outstanding . . . . 87.4 87.7
Additional financial and operating information appears on the attached pages.
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UNION TEXAS PETROLEUM
FINANCIAL SUMMARY
(amounts in millions, except per share data)
THIRD QUARTER FIRST NINE MONTHS
------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
Sales and operating revenues $ 227 $ 197 $ 709 $ 637
Net income $ 34 $ 12 $ 112 $ 79
Major operations (a)
Indonesia $ 33 $ 20 $ 99 $ 74
U.K. North Sea $ 10 $ 3 $ 51 $ 26
Pakistan $ 11 $ 4 $ 20 $ 12
Petrochemicals $ 5 $ 10 $ 13 $ 34
Earnings per share of
common stock $ .39 $ 0.13 $ 1.28 $ 0.89
Discretionary cash flow (b) $ 71 $ 84 $ 287 $ 280
Major operations (a)
Indonesia $ 47 $ 34 $ 139 $ 119
U.K. North Sea $ 23 $ 41 $ 146 $ 121
Pakistan $ 13 $ 6 $ 29 $ 21
Petrochemicals $ 10 $ 17 $ 24 $ 56
Average common
shares outstanding 87.0 87.8 87.4 87.7
See footnotes on page 10.
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UNION TEXAS PETROLEUM
(b) DISCRETIONARY CASH FLOW SUMMARY
(amounts in millions)
THIRD QUARTER FIRST NINE MONTHS
------------- -----------------
1996 1995 1996 1995
---- ------- ---- -------
Net income $ 34 $ 12 $ 112 $ 79
Less: Equity partnership
Income $ 8 $ 6 $ 22 $ 17
Add: DD&A $ 49 $ 52 $ 152 $ 136
Deferred taxes $ (24) $ (4) $ (23) $ (7)
Exploration expenses $ 9 $ 22 $ 33 $ 60
Unimar equity DCF (c) $ 11 $ 8 $ 35 $ 29
Discretionary cash flow $ 71 $ 84 $ 287 $ 280
See footnotes on page 10.
OPERATING SUMMARY (d)
THIRD QUARTER FIRST NINE MONTHS
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1996 1995 1996 1995
---- ---- ---- ----
Net crude oil sales (MBBLS/D)
U.K. North Sea 37 47 41 37
Indonesia 6 5 6 6
Pakistan 6 6 6 6
Average crude oil prices (per BBL)
U.K. North Sea $20.11 $15.16 $18.76 $16.22
Indonesia $18.63 $16.39 $18.59 $17.19
Pakistan $17.32 $13.77 $16.58 $14.41
Net natural gas sales (MMCF/D)
Indonesian LNG 222 191 225 212
U.K. North Sea 18 18 33 29
Pakistan 41 45 42 45
Average natural gas prices (per MCF)
Indonesian LNG $ 3.47 $ 2.92 $ 3.39 $ 3.06
U.K. North Sea (e) $ 2.21 $ 2.74 $ 2.39 $ 2.91
Pakistan $ 2.36 $ 1.37 $ 1.64 $ 1.32
Ethylene (per LB)
Sales price $ .23 $ .25 $ .21 $ .27
Margins $ .08 $ .14 $ .06 $ .16
Sales volumes (MLBS/D) (f) 1,385 1,180 1,381 1,271
See footnotes on page 10.
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UNION TEXAS PETROLEUM
CONSOLIDATED STATEMENT OF OPERATIONS
(amounts in millions, except per share amounts) (unaudited)
THIRD QUARTER FIRST NINE MONTHS
------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Sales and operating revenues $ 227 $ 197 $ 709 $ 637
Interest income and other revenues 1 --- 2 ---
Net earnings of equity investee 8 7 22 18
----- ----- ----- -----
Total revenues 236 204 733 655
Costs and other deductions:
Product costs and operating expenses 81 72 242 225
Exploration expenses 9 22 33 60
Depreciation, depletion and
amortization 49 52 153 137
Selling, general and administrative
expenses 6 5 19 17
Interest expense (g) 6 9 20 19
------ ------ ----- -----
Income before income taxes 85 44 266 197
Income taxes 51 32 154 118
----- ----- ---- ----
Net income $ 34 $ 12 $ 112 $ 79
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Earnings per share of common stock $ .39 $ .13 $1.28 $ .89
====== ====== ===== ======
Dividends per share of common stock $ .05 $ .05 $ .15 $ .15
====== ====== ====== ======
Weighted average number of shares
outstanding 87.0 87.8 87.4 87.7
==== ==== ==== ====
See footnotes on page 10.
SELECTED BALANCE SHEET DATA
(amounts in millions)
SEPTEMBER 30, 1996 DECEMBER 31, 1995
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Total assets $1,851 $1,837
Long-term debt 627 712
Shareholders' equity 513 424
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FOOTNOTES
(a) Excludes corporate items and other worldwide exploration ventures.
(b) Discretionary cash flow (DCF) is net income (less equity partnership
income) excluding depreciation, deferred taxes, and exploration expenses,
plus the company's estimated share of discretionary cash flow from its
equity interest in its Unimar partnership's Indonesian operations.
(c) Unimar equity DCF reflects the company's estimated share of discretionary
cash flow from its equity interest in its Unimar partnership's Indonesian
operations.
(d) Excludes the Unimar equity partnership.
(e) Excludes capacity charge of $23 million and $23 million in the first nine
months of 1996 and 1995, respectively, from the North and South Sean gas
fields in the U.K. North Sea.
(f) Represents Union Texas' 41.67% net interest in the jointly-owned Geismar
ethylene plant in Louisiana.
(g) Interest expense is net of amounts capitalized of $7 million and $6
million in the third quarter of 1996 and 1995, respectively, and $19
million and $17 million in the first nine months of 1996 and 1995,
respectively.
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