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EXHIBIT 99.1
NEWS RELEASE
[UNION TEXAS PETROLEUM LETTERHEAD]
Contact: Carol L. Cox
(713) 968-2714
FOURTH QUARTER AND FULL YEAR 1994 EARNINGS
SUBSTANTIALLY HIGHER AT UNION TEXAS PETROLEUM
Higher Sales Volumes in U.K. North Sea and Indonesia and Improved Ethylene
Margins Contribute to Increased Net Income in 1994
Houston, January 25, 1995 -- Union Texas Petroleum Holdings, Inc.
today reported 1994 earnings of 76 cents per share, up from 31 cents per share
in 1993. Net income was $67 million, compared to $27 million in 1993.
"Union Texas turned in a very good performance in 1994, even though
low oil prices continued to affect our industry," said Chairman and CEO Clark
Johnson. "In 1994, our company set a production record for our international
operations, increased year-end reserves, reduced our unit operating costs and
benefitted from sharply higher ethylene margins. We also developed an expanded
and exciting exploration program for 1995. Union Texas is well positioned to
continue to grow in 1995 and beyond."
Union Texas' comparative results for 1993 were affected by three
non-recurring items and also reflect a non-cash $4 million charge for the
cumulative effect of adopting a new accounting standard for postemployment
benefits, effective January 1, 1993. Excluding these four items, the company's
earnings for 1993 were 61 cents per share or $54 million.
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For the fourth quarter of 1994, Union Texas reported net income of $17
million or 20 cents per share, compared to $5 million or 6 cents per share for
the same period in 1993. The company said its 1994 fourth quarter results were
favorably affected by increased ethylene margins and higher oil prices. During
the fourth quarter of 1994, Union Texas' ethylene margins from its
petrochemical operations averaged over 11 cents per pound, up from 2 cents per
pound a year earlier. The strengthening ethylene margins were attributed to
tight supplies of ethylene coupled with improving demand for various consumer
products that utilize ethylene in their manufacturing process. Union Texas
also noted that its average sales price for U.K. North Sea crude oil was 18%
higher during the fourth quarter of 1994 than the average price a year ago.
Increased Revenues
Sales and operating revenues for the fourth quarter and full-year 1994
totaled $214 million and $748 million, respectively, versus $189 million and
$682 million, respectively, for the corresponding periods in 1993. The
increase in revenues for the full-year 1994 was due largely to higher sales
volumes in the U.K. North Sea and Indonesia and improved ethylene sales prices,
partially offset by lower oil and liquefied natural gas (LNG) prices. The
company's average worldwide oil and gas sales prices in 1994 were $14.94 per
barrel and $2.48 per thousand cubic feet, respectively. "All of Union Texas'
oil and gas producing operations are located overseas. The vast majority of
our gas production is sold to international gas markets in the Pacific Rim and
U.K. North
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Sea, which accounts for the higher gas prices that Union Texas receives as
compared to the currently weak U.S. domestic gas markets," Johnson noted.
Operations Highlights
In a review of the company's performance in 1994, Mr. Johnson pointed
out that Union Texas made significant progress toward its goals of boosting
production, increasing reserves and expanding its exploration portfolio.
"During 1994, our worldwide annual production rose 16% from 1993
levels to approximately 45 million barrels of oil equivalent. Our fields in
the U.K. North Sea recorded significantly higher sales volumes of both oil and
gas. In Indonesia, where our joint venture supplies natural gas to the world's
largest LNG facility, a record 247 gross cargoes of LNG (108 billion cubic feet
of gas net to Union Texas) were sold in 1994, up from 217 gross cargoes (96
billion cubic feet net to Union Texas) in 1993, benefitting from increased
production capacity at the LNG plant," Johnson said.
A significant portion of Union Texas' worldwide natural gas output is
produced from its Indonesian operations where the gas is liquefied and sold
into the growing Pacific Rim markets. Indonesian LNG prices, which are based
on world oil prices, averaged $2.85 per thousand cubic feet in 1994, off from
$3.17 in the previous year. The company's average sales price for oil was
$14.94 per barrel in 1994, compared to $15.43 per barrel in 1993. About 90% of
Union Texas' oil and gas revenues are indexed to world oil prices.
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Strategic Acquisition
"Our 1994 acquisition of an interest in the U.K. North Sea's Britannia
field helped us to accomplish one of our key objectives: to increase our
reserve base through strategic purchases. With Union Texas' financial
strength, our company is in an excellent position to continue to increase value
for our shareholders by pursuing an aggressive exploration program and quality
acquisition opportunities," Johnson said.
As previously reported, Union Texas increased its proved worldwide
reserves at year-end 1994 to 411 million barrels of oil equivalent, up from 381
million barrels at the end of 1993. The company's reserve increase in 1994
included 38 million barrels of oil equivalent in proved reserves attributable
to Union Texas' acquisition of a 9.42% unit interest in the Britannia field,
the U.K. North Sea's largest undeveloped gas field. Over time, Union Texas
anticipates recording additional proved reserves from the Britannia field,
supported by the field's development results and its production history.
Through reserve acquisitions, revisions and additions, the company replaced
approximately 170% of its 1994 production at a cost of about $4.50 per barrel
of oil equivalent.
Higher Ethylene Margins
Discussing the upturn in the petrochemical industry, Johnson pointed
out that Union Texas' 1995 performance would likely continue to benefit from
higher ethylene margins. By December 1994, the company's ethylene margins had
risen to approximately 12 cents per pound, up from about 1 cent at the
beginning of 1994. The company's
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average ethylene margin for the full-year 1994 was approximately 6 cents per
pound. "With an expected 1995 net production of approximately 500 million
pounds of ethylene at our petrochemical plant, Union Texas could benefit
significantly from continued high margin levels," Johnson said.
Lower Unit Operating Expenses
Johnson also noted that the company reduced its unit operating
expenses by approximately 30% during 1992 to 1994, from about $5.50 per barrel
of oil equivalent in 1992 to approximately $4.00 per barrel in 1994, primarily
as a result of increased volumes in the U.K. North Sea, lower LNG plant costs
in Indonesia and the benefits of a company-wide cost containment program.
Expanded Exploration Portfolio
In the company's exploration programs, Johnson commented that Union
Texas further expanded its new ventures portfolio in 1994 by entering into
exploration concessions in Vietnam, Tunisia, Alaska's Kenai Peninsula, Pakistan
and Ireland. "The work that our new venture exploration team accomplished over
the past several years has set the stage for a very exciting year in 1995,"
Johnson said. "In 1995, we plan to participate in at least nine exploration
wells in our new ventures areas in addition to as many as 20 exploration wells
in ongoing programs in our core producing areas in the U.K. North Sea,
Indonesia and Pakistan."
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.
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North Sea, Indonesia and other strategic areas. The company also has
petrochemicals interests in the U.S.
Comparative financial highlights follow (amounts in millions, except per share
data):
Three Months Ended December 31,
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1994 1993
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Net income............................... $ 17 $ 5
Earnings per share....................... $ .20 $ .06
Sales and operating revenues............. $ 214 $ 189
Average common shares outstanding........ 87.6 87.6
Full Year Ended December 31,
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1994 1993
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Net income............................... $ 67 $ 27(a)
Net income excluding non-recurring
items and cumulative effect of change
in accounting principle............... $ 67 $ 54
Earnings per share:
Before cumulative effect of change
in accounting principle............. $ .76 $ .35
Cumulative change in accounting
principle........................... - $(0.04)
Net income............................ $ .76 $ .31
Sales and operating revenues............. $ 748 $ 682
Average common shares outstanding........ 87.6 87.2
See footnotes on page 9.
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)
FOURTH QUARTER FULL YEAR
----------------------- ------------------------
1994 1993 1994 1993
Sales and operating revenues $ 214 $ 189 $ 748 $ 682
Net income $ 17 $ 5 $ 67 $ 27(a)
Major operations(b)
Indonesia $ 26 $ 23 $ 94 $ 89
U.K. North Sea $ 7 $ 1 $ 27 $ 23
Pakistan $ 1 $ 4 $ 10 $ 16
Petrochemicals $ 9 $ 3 $ 15 $ 5
Earnings per share of
common stock
Before cumulative effect
of change in accounting
principle - - - $ .35
Cumulative effect of
change in accounting
principle - - - $(0.04)
Net income $ .20 $ .06 $ .76 $ .31
Discretionary cash flow(c) $ 76 $ 83 $ 295 $ 292
Major operations (b)
Indonesia $ 40 $ 46 $ 154 $ 168
U.K. North Sea $ 39 $ 41 $ 142 $ 125
Pakistan $ 3 $ 3 $ 22 $ 24
Petrochemicals $ 15 $ 6 $ 28 $ 12
Average common shares 87.6 87.6 87.6 87.2
See footnotes on page 9.
DISCRETIONARY CASH FLOW SUMMARY
(amounts in millions)
FOURTH QUARTER FULL YEAR
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1994 1993 1994 1993
Net income $ 17 $ 5 $ 67 $ 27(a)
Less: Equity partnership
income $ (5) $ (1) $ (20) $ (9)
Add: DD&A $ 45 $ 50 $ 168 $ 243
Deferred taxes $ (5) $ (2) $ (12) $(107)
Exploration expenses $ 14 $ 20 $ 54 $ 93
Unimar equity DCF(d) $ 10 $ 11 $ 38 $ 41
Cumulative effect of
change in accounting
principle - - - 4
Discretionary cash flow $ 76 $ 83 $ 295 $ 292
See footnotes on page 9.
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OPERATING SUMMARY (e)
FOURTH QUARTER FULL YEAR
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1994 1993 1994 1993
Net crude oil sales (MBBLS/D)
U.K. North Sea 37 41 34 27
Indonesia 5 6 6 6
Pakistan 4 6 5 5
Average crude oil prices (per BBL)
U.K. North Sea $16.18 $13.74 $14.99 $15.10
Indonesia $16.00 $14.12 $15.78 $17.26
Pakistan $12.98 $14.03 $13.43 $15.04
Net natural gas sales (MMCF/D)
Indonesian LNG 205 217 222 198
U.K. North Sea 36 13 24 8
Pakistan 40 41 43 43
Average natural gas prices (per MCF)
Indonesian LNG $ 2.92 $ 2.96 $ 2.85 $ 3.17
U.K. North Sea(f) $ 2.91 $ 2.48 $ 2.57 $ 2.49
Pakistan $ 1.03 $ 1.14 $ 1.07 $ 1.26
See footnotes on page 9.
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FOOTNOTES
(a) Includes a one-time favorable benefit of approximately $50 million due
principally to the reduction in U.K. Petroleum Revenue Tax. Includes
a non-cash charge of $25 million due to the write-off of the Kuvlum
prospect in Alaska. Also includes a non-cash charge of approximately
$48 million, net of tax, related to the write-down of the Piper field
in the U.K. North Sea and a non-cash charge of $4 million for the
cumulative effect of a change in accounting principle as a result of
the company adopting a new accounting standard for future long-term
disability benefits.
(b) Excludes corporate items and other worldwide ventures.
(c) 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.
(d) Unimar equity DCF reflects the company's estimated share of
discretionary cash flow from its equity interest in its Unimar
partnership's Indonesian operations.
(e) Excludes the Unimar equity partnership.
(f) Excludes capacity charge of $32 million and $31 million in 1994 and
1993, respectively, from the North and South Sean gas fields in the
U.K. North Sea.
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