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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-9019
UNION TEXAS PETROLEUM HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0040040
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1330 POST OAK BLVD.
HOUSTON, TEXAS 77056
(Address of principal
executive offices
and zip code)
(713) 623-6544
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
As of April 17, 1998, there were 85,283,525 shares of Union Texas Petroleum
Holdings, Inc. $.05 par value Common Stock issued and outstanding.
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FORM 10-Q
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
MARCH 31, DECEMBER 31,
1998 1997
----------- -----------
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents ..................................... $ 39,216 $ 24,324
Accounts and notes receivable ................................. 87,148 82,172
Inventories ................................................... 50,236 38,318
Prepaid expenses and other current assets ..................... 34,755 30,539
----------- -----------
Total current assets ...................................... 211,355 175,353
Equity investments .................................................. 91,117 90,488
Property, plant and equipment, at cost, less accumulated
depreciation, depletion and amortization* ..................... 1,981,582 1,746,661
Other assets ........................................................ 8,706 9,054
----------- -----------
Total assets .............................................. $ 2,292,760 $ 2,021,556
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .............................................. $ 144,899 $ 132,735
Taxes payable ................................................. 69,502 94,366
Other current liabilities ..................................... 51,773 52,555
----------- -----------
Total current liabilities ................................. 266,174 279,656
Long-term debt ...................................................... 719,807 626,404
Deferred income taxes ............................................... 325,420 321,879
Other liabilities ................................................... 129,526 125,022
----------- -----------
Total liabilities ......................................... 1,440,927 1,352,961
----------- -----------
Stockholders' equity:
Preferred stock (Series A Cumulative Preferred Stock) ......... 171,480
Common stock .................................................. 4,391 4,391
Paid in capital ............................................... 17,788 18,645
Cumulative foreign exchange translation adjustment and other .. (28,909) (34,954)
Retained earnings ............................................. 736,930 733,201
Common stock held in treasury, at cost:
2,581,182 shares at March 31, 1998 and 2,728,267
shares at December 31, 1997 ............................... (49,847) (52,688)
----------- -----------
Total stockholders' equity ................................ 851,833 668,595
----------- -----------
Total liabilities and stockholders' equity ................ $ 2,292,760 $ 2,021,556
=========== ===========
* The Company follows the successful efforts method of accounting for
oil and gas activities.
The accompanying notes are an integral part of this financial statement.
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FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1997
-------- --------
Revenues:
Sales and operating revenues ............................. $190,184 $282,021
Interest income and other revenues ....................... 534 2,555
Net earnings of equity investees ......................... 3,063 7,854
-------- --------
193,781 292,430
Costs and other deductions:
Product costs and operating expenses ..................... 73,740 81,360
Exploration expenses ..................................... 23,251 10,420
Depreciation, depletion and amortization ................. 54,516 59,225
Selling, general and administrative expenses ............. 6,215 4,788
Interest expense ......................................... 580 3,984
-------- --------
Income before income taxes .................................... 35,479 132,653
Income taxes .................................................. 26,626 68,883
-------- --------
Net income .................................................... $ 8,853 $ 63,770
Less: preferred dividends ..................................... 868
-------- --------
Net income applicable to common stockholders .................. $ 7,985 $ 63,770
======== ========
EARNINGS PER SHARE OF COMMON STOCK:
Basic and diluted earnings per share of common stock ..... $ .09 $ .74
======== ========
DIVIDENDS PER SHARE OF COMMON STOCK ........................... $ .05 $ .05
======== ========
Weighted average number of shares outstanding (000s) .......... 85,151 85,863
======== ========
Weighted average number of shares outstanding including
potential common shares (000s) ............................ 85,507 86,205
======== ========
The accompanying notes are an integral part of this financial statement.
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FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ......................................................................... $ 8,853 $ 63,770
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization ........................................ 54,516 59,225
Deferred income taxes ........................................................... 242 (6,954)
Net income of equity investees .................................................. (3,063) (7,854)
Other ........................................................................... 754 1,247
--------- ---------
Net cash provided by operating activities before changes in other
assets and liabilities ..................................................... 61,302 109,434
(Increase) decrease in accounts and notes receivable ............................ (4,894) 4,571
(Increase) decrease in inventories ............................................. (11,778) 4,493
Increase in prepaid expenses and other assets ................................... (4,575) (9,243)
Decrease in accounts payable and other liabilities .............................. (5,794) (16,613)
Decrease in income taxes payable ................................................ (24,748) (9,911)
--------- ---------
Net cash provided by operating activities .................................... 9,513 82,731
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ......................................... (255,584) (36,055)
Cash provided by equity investees ................................................. 2,434 8,066
--------- ---------
Net cash required by investing activities ....................................... (253,150) (27,989)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the issuance of preferred stock .................................. 171,480
Net proceeds from issuance of long-term debt ....................................... 140,940 8,160
Net (payments) on money market lines of credit ..................................... (49,928) (44,673)
Dividends on preferred stock ....................................................... (868)
Dividends on common stock .......................................................... (4,256) (4,320)
Proceeds from issuance of treasury stock ........................................... 1,161 1,202
Purchase of treasury stock ......................................................... (34,305)
--------- ---------
Net cash provided (required) by financing activities ............................ 258,529 (73,936)
--------- ---------
Net increase (decrease) in cash and cash equivalents ............................... 14,892 (19,194)
Cash and cash equivalents at beginning of period ................................... 24,324 43,574
--------- ---------
Cash and cash equivalents at end of period ......................................... $ 39,216 $ 24,380
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) ............................................ $ $ 820
Income taxes .................................................................... 50,875 85,944
The accompanying notes are an integral part of this financial statement.
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FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NOTE 1 - BASIS OF PRESENTATION - These consolidated financial statements should
be read in the context of the consolidated financial statements and notes
thereto filed with the Securities and Exchange Commission ("SEC") in the
Company's 1997 annual report on Form 10-K. In the opinion of management, the
accompanying unaudited consolidated financial statements reflect all
adjustments, consisting only of normal adjustments, necessary to present fairly
the financial position of Union Texas Petroleum Holdings, Inc. and its
consolidated subsidiaries at March 31, 1998, and the results of operations and
cash flows for the three months ended March 31, 1998 and 1997. The results of
operations for the three months ended March 31, 1998, should not necessarily be
taken as indicative of the results of operations that may be expected for the
entire year 1998.
NOTE 2 - PREFERRED STOCK - Pursuant to the Company's July 1997 shelf
registration statement filed with the SEC, on March 6, 1998, the Company issued
1,750,000 shares of 7.14% Series A Cumulative Preferred Stock with a par value
of $.01 per share and a liquidation preference equivalent to $100.00 per share.
The Company received approximately $171 million (after deducting underwriting
discounts and commissions and offering expenses) in net proceeds from the
offering. The Series A Cumulative Preferred Stock is not redeemable prior to
March 31, 2008, except under certain limited circumstances. The Company declared
a dividend to all holders of the preferred stock of record on March 15, 1998,
which was paid on March 31, 1998.
NOTE 3 - MANDATORY PUTABLE/REMARKETABLE SECURITIES (MAPS(SM)) (the "MAPS") -
Pursuant to the Company's July 1997 shelf registration statement filed with the
SEC, on April 15, 1998, the Company issued 7.000% MAPS due April 15, 2038. The
MAPS are subject to mandatory tender on April 15, 2008. The net proceeds to the
Company were approximately $154 million (after deducting underwriting discounts
and commissions and offering expenses) which includes a premium paid by the
remarketing dealer for the right to remarket the MAPS on the remarketing date of
April 15, 2008. The premium will be amortized over the life of the related debt.
Net proceeds from the sale of the MAPS were used to pay down indebtedness under
certain uncommitted and unsecured money market lines of credit and for general
corporate purposes.
NOTE 4 - EARNINGS PER SHARE - In the fourth quarter of 1997, the Company adopted
the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share," and restated previously reported earnings per share
("EPS") in conformity with SFAS 128. The new standard specifies the computation,
presentation and disclosure requirements for EPS. A reconciliation of the
numerators and denominators of the basic and diluted EPS computations is as
follows:
Three months ended March 31,
----------------------------
1998 1997
------- -------
Basic EPS Computation:
Numerator, Net Income applicable to common stockholders .... $ 7,985 $63,770
Denominator, Common Shares Outstanding (000s) .............. 85,151 85,863
------- -------
Basic EPS per share ........................................ $ .09 $ .74
======= =======
Diluted EPS Computation:
Numerator, Net Income applicable to common stockholders .... $ 7,985 $63,770
Denominator, Common Shares Outstanding (000s) .............. 85,151 85,863
Potential Common Shares:
Stock options (000s) .................................. 356 342
------- -------
Total (000s) .......................................... 85,507 86,205
------- -------
Diluted EPS per share ............................................ $ .09 $ .74
======= =======
Weighted average stock options (000s) for the three months ended March 31, 1998
and 1997 that were not included in the computation of diluted shares since they
had an anti-dilutive effect were 677 and 404, respectively.
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NOTE 5 - ACCOUNTING PRONOUNCEMENTS RECENTLY ISSUED - In the first quarter of
1998 the Company adopted the provisions of SFAS No. 130, "Reporting
Comprehensive Income," which requires that all items required to be recognized
under accounting standards as components of comprehensive income be reported in
the financial statements. The Company's comprehensive income was as follows:
Three Months Ended March 31,
----------------------------
1998 1997
------- --------
Net income .................................................. $ 8,853 $ 63,770
Other comprehensive income (loss):
Foreign exchange translation adjustments (net of tax) .... 6,045 (23,029)
------- --------
Comprehensive income ........................................ $14,898 $ 40,741
======= ========
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," establishes standards for reporting information about operating
segments in annual financial statements and requires selected information about
operating segments in interim financial reports issued to shareholders. SFAS No.
131 is effective for financial statements for periods beginning after December
15, 1997 but the statement need not be applied to interim financial statements
in the initial year of application.
NOTE 6 - VENEZUELA ACQUISITION - In February 1998, the Company acquired all of
the stock of Compania Occidental de Hidrocarburos, Inc. ("Hidrocarburos"), a
U.S. affiliate of Occidental Oil and Gas Corporation, for approximately $212
million, which included approximately $18 million in working capital, effective
as of December 31, 1997. Hidrocarburos operates the Desarrollo Zulia Occidental
("DZO") unit under its 100% interest in an operating service contract with a
subsidiary of the national oil company, Petroleos de Venezuela S.A.
NOTE 7 - CONTINGENCIES - The Company and its subsidiaries and related companies
are named defendants in a number of lawsuits and named parties in numerous
government proceedings arising in the ordinary course of business. While the
outcome of contingencies, lawsuits or other proceedings against the Company
cannot be predicted with certainty, management expects that any liability, to
the extent not provided for through insurance or otherwise, will not have a
material adverse effect on the financial statements of the Company.
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UNION TEXAS PETROLEUM HOLDINGS, INC.
With respect to the unaudited consolidated financial information of Union Texas
Petroleum Holdings, Inc. for the three-month periods ended March 31, 1998 and
1997, Price Waterhouse LLP reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate report dated April 22, 1998 appearing below, states that
they did not audit and they do not express an opinion on that unaudited
consolidated financial information. Price Waterhouse LLP has not carried out any
significant or additional audit tests beyond those which would have been
necessary if their report had not been included. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. Price Waterhouse LLP is not
subject to the liability provisions of section 11 of the Securities Act of 1933
for their report on the unaudited consolidated financial information because
that report is not a "report" prepared or certified by Price Waterhouse LLP
within the meaning of sections 7 and 11 of the Act.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Union Texas Petroleum Holdings, Inc.
We have reviewed the accompanying consolidated balance sheet of Union Texas
Petroleum Holdings, Inc. and consolidated subsidiaries as of March 31, 1998 and
the related consolidated statements of operations and of cash flows for the
three month periods ended March 31, 1998 and 1997. This financial information is
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial information for it to be in conformity
with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of December 31, 1997, and the related
consolidated statements of operations, of cash flows, and of stockholders'
equity for the year then ended (not presented herein), and in our report dated
February 16, 1998 we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet information as of December 31, 1997, is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
PRICE WATERHOUSE LLP
Houston, Texas
April 22, 1998
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements, notes, and management's discussion contained in the registrant's
1997 annual report on Form 10-K, and condensed financial statements and notes
contained in this report.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1997
Net income applicable to common stockholders for the three months ended March
31, 1998, was $8 million, or $.09 basic and diluted earnings per share as
compared to net income applicable to common stockholders of $64 million, or $.74
basic and diluted earnings per share reported for the same period in 1997. The
current quarter was unfavorably affected by lower worldwide oil prices, lower
U.K. gas volumes, lower Indonesian LNG prices and volumes, and higher
exploration expenses.
Sales and operating revenues for the three months ended March 31, 1998, were
$190 million, as compared to $282 million for the first quarter of 1997.
International revenues totaled $154 million as compared to $234 million for the
first quarter of 1997. In the U.K., sales and operating revenues decreased by
$55 million due to lower oil prices and volumes and lower sales volumes
primarily from the Sean fields. In Indonesia, sales decreased $27 million due to
lower LNG volumes and prices. For the full year, LNG sales volumes are expected
to be approximately 20% below 1997 levels. In Venezuela, revenues of $6 million
are included for the Company's first quarter 1998 acquisition of an interest in
an operating service contract of the DZO unit (see Note 6 of Notes to Financial
Statements and Financial Condition). In Pakistan, sales were $4 million below
1997 primarily due to lower crude oil prices.
Average prices received and volumes sold by the Company's major operations
during the first quarter of 1998 and 1997, respectively, were as follows:
PRICES VOLUMES
(000S PER DAY)
1998 1997 1998 1997
---- ---- ---- ----
Crude oil (barrels):
U.K ................................. $ 12.32 $ 19.17 40 47
Pakistan ............................ 12.76 19.15 6 7
Indonesia ........................... 18.63 21.79 6 6
Venezuela (Operating Service Fee) ... 4.37 24*
Indonesian LNG (Mcf) ..................... 2.96 4.02 177 194
Pakistan natural gas (Mcf) ............... 1.61 1.71 47 38
U.K. natural gas (Mcf) ................... 2.85 3.00 19 79
U.S. ethylene (pounds) ................... .19 .25 1,256 1,168
* Reflects 56 days of production for an interest in an operating service
contract acquired in February 1998.
Petrochemical revenues totaled $36 million as compared to $48 million in the
first quarter of 1997, while operating profit was $3 million as compared to $1
million in the prior period. The revenue decrease was principally due to lower
ethylene sales prices partially offset by higher ethylene sales volumes, while
lower feedstock costs contributed to the operating profit increase.
Interest expense in the first quarter of 1998 was lower than the same period of
1997 due to higher capitalized interest related to the Company's acquisition of
interests in Venezuela and the final phases of development of the Britannia
field, which field is expected to commence production in August 1998. Higher
exploration expenses were due to increased dry hole costs primarily in new
venture areas. The increased dry hole costs, certain of which provided no tax
benefit, resulted in a higher effective tax rate in the first quarter of 1998
compared to the first quarter of 1997.
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FINANCIAL CONDITION
Cash flow from operations: Net cash provided by operating activities was $10
million in the first quarter of 1998, a decrease of $73 million from the same
period in the prior year. The decline was due mainly to lower worldwide oil
prices, lower Indonesian LNG volumes and prices and lower U.K. gas volumes. Net
cash required by investing activities was $253 million in 1998, an increase of
$225 million from 1997. The change was primarily related to the increase in
property, plant and equipment for the DZO acquisition. In 1998, net cash
provided by financing activities was $259 million compared to net cash required
in 1997 of $74 million. The change resulted from proceeds from the Company's
preferred stock issue and the Hidrocarburos facility which was related to the
Company's DZO acquisition.
Capital resources: Capital expenditures for the first quarter of 1998 were $81
million (excludes acquisitions) excluding capitalized interest of $14 million.
Capital expenditures for the first quarter of 1997 were $25 million excluding
capitalized interest of $8 million. The current quarter increase was primarily
due to increased exploration drilling in new venture areas and higher
development spending in Alaska and Venezuela.
In February 1998, the Company acquired all of the stock of Compania Occidental
de Hidrocarburos, Inc. ("Hidrocarburos"), a U.S. affiliate of Occidental Oil &
Gas Corporation ("Occidental"), for approximately $212 million, which includes
approximately $18 million in working capital, effective as of December 31, 1997.
The Company initially funded the acquisition under bank facilities, including a
new $130 million facility through Hidrocarburos guaranteed by the Company.
Occidental may receive contingent payments of up to a maximum of $15 million
annually for six years based primarily on the level of oil prices. Hidrocarburos
operates as contractor of the DZO unit in Western Venezuela under a 20-year
operating service contract with a subsidiary of the national oil company, PDVSA.
The contractor invests capital and provides technology for reactivation of the
fields for which the contractor receives various fees per barrel delivered to
the custody transfer point. The fees received are operating, capital
reimbursement and interest on unrecovered capital costs which are in total
limited by a maximum total fee. The maximum total fee is indexed with a basket
of crude oil products. The Company cannot predict the extent that the future
maximum total fee will limit the operating, interest and capital fees received
and recorded. Additionally, an incremental incentive fee of several dollars per
barrel, which is also indexed to a basket of crude oil products but is not
limited by the maximum total fee, is payable when cumulative production from the
DZO unit (from inception of the 1993 contract) reaches 52 million barrels.
Cumulative production is expected to reach 52 million barrels during the second
half of 1999. The contractor does not pay royalties related to the DZO unit. In
1998, the Company recorded for the DZO unit 114 million barrels of proved
reserves of which 56 million barrels are classified as proved undeveloped. The
Company anticipates spending $400 to $450 million over the next nine years for
future DZO development expenditures. The Company plans to increase current
production from 23,000 gross barrels a day up to 55,000 gross barrels within
five years.
Financing activities: Pursuant to the Company's July 1997 shelf registration
statement filed with the SEC, on March 6, 1998, the Company issued 1,750,000
shares of 7.14% Series A Cumulative Preferred Stock with a par value of $.01 per
share and a liquidation preference equivalent to $100.00 per share. The Company
received approximately $171 million (after deducting underwriting discounts and
commissions and offering expenses) in net proceeds from the offering. The Series
A Cumulative Preferred Stock is not redeemable prior to March 31, 2008, except
under certain limited circumstances. The Series A Cumulative Preferred Stock is
not convertible into or exchangeable for any other property or securities of the
Company. The Company declared a dividend of $868 thousand, to holders of the
preferred stock of record on March 15, 1998, which was paid on March 31, 1998.
Pursuant to the Company's July 1997 shelf registration statement filed with the
SEC, on April 15, 1998, the Company issued 7.000% MAPS due April 15, 2038. The
MAPS are subject to mandatory tender on April 15, 2008. The net proceeds to the
Company were approximately $154 million (after deducting underwriting discounts
and commissions and offering expenses) which includes a premium paid by the
remarketing dealer for the right to remarket the MAPS on the remarketing date of
April 15, 2008. The premium will be amortized over the life of the related debt.
Net proceeds from the sale of the MAPS were used to pay down indebtedness under
certain uncommitted and unsecured money market lines of credit and for general
corporate purposes
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The Company had two unsecured credit facilities (the "Credit Facilities") at
March 31, 1998. One of the Credit Facilities is a $100 million revolver that
provides for conversion of amounts outstanding on March 9, 1999 to a one-year
term loan maturing March 8, 2000. This facility replaced a $100 million
unsecured credit agreement that matured on March 9, 1998. The other Credit
Facility is a $450 million revolver that reduces quarterly by $35 million
beginning June 30, 2001, with a final maturity of March 31, 2002. At March 31,
1998, no amounts were outstanding under the Credit Facilities. The Credit
Facilities contain restrictive covenants and require maintenance of
stockholders' equity, as adjusted, at $350 million. At March 31, 1998, the
Company's adjusted stockholders' equity was approximately $881 million.
The Company has uncommitted and unsecured lines of credit with several banks in
both U.S. dollars and pounds sterling. These money market borrowings, which have
a short-term maturity, have been classified as long-term debt based on the
Company's ability to refinance them on a long-term basis through its Credit
Facilities. At March 31, 1998, $33 million was outstanding under these money
market lines. As of March 31, 1998, the Company had approximately $387 million
of available financing under the Credit Facilities. After the issuance of the
preferred stock and MAPS, the Company had approximately $521 million of
available financing under the Credit Facilities as of April 15, 1998.
The Company's indirect subsidiary, Union Texas Britannia Limited ("UTBL"), has a
150 million pounds sterling secured financing from a syndicate of banks. At
March 31, 1998, 92 million pounds sterling ($154 million) was outstanding under
UTBL's financing which bore interest at a weighted average rate of 8.3% per
annum. The Company has a $130 million facility through Hidrocarburos that is
guaranteed by the Company. At March 31, 1998, $130 million was outstanding under
the Hidrocarburos facility, which bore interest at a weighted average rate of
6.2% per annum and was restructured in connection with the issuance of the MAPS.
Financial condition: In March, 1998, oil prices fell to their lowest levels
since 1988. For example, the spot price for West Texas Intermediate averaged
approximately $15.93 per barrel for the first quarter of 1998, down from
approximately $22.74 per barrel for the first quarter of 1997. In light of the
current low oil price environment, the Company is reviewing its capital
expenditure budget for 1998 and expects its 1998 capital spending to be about
15% below its original budget of approximately $413 million.
In the first quarter of 1998 the Company declared and paid a dividend of
approximately $868 thousand on its preferred stock for the 25 days it was
outstanding and approximately $4.3 million on its common stock. On April 20,
1998 the Company announced a dividend on its common stock of $.05 per share to
stockholders of record as of April 30, 1998, payable on May 15, 1998.
See the Company's 1997 annual report on Form 10-K - Management's Discussion and
Analysis of Financial Condition and Results of Operations - Financial Condition
for a discussion of the Company's plan to address the year 2000 issue.
The foregoing contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act that involve risks and uncertainties,
including price volatility, exploration, development, operational,
implementation and opportunity 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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FORM 10-Q
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company and its subsidiaries and related companies are named defendants in
numerous lawsuits and named parties in numerous governmental proceedings arising
in the ordinary course of business. While the outcome of lawsuits or other
proceedings against the Company cannot be predicted with certainty, management
does not expect these matters to have a material adverse effect on the financial
statements of the Company. (See Item 3 in the Company's 1997 annual report on
Form 10-K.)
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
3.1 Certificate of Designation, 7.14% Series A
Cumulative Preferred Stock
4.2 Specimen Form of 7.14% Series A Cumulative
Preferred Stock
4.3 Specimen Form of 7.000% MAndatory
Putable/remarketable Securities (MAPS(SM)) due
April 15, 2038
10.1 Credit Agreement dated as of March 10, 1998
among Union Texas Petroleum Holdings, Inc., the
Banks and Co-Agents listed therein and
NationsBank of Texas, N.A., as Agent
10.2 Remarketing Agreement between Union Texas
Petroleum Holdings, Inc. and NationsBanc
Montgomery Securities LLC with respect to the
MAPS(SM) (Filed as Exhibit 1.4 to the Company's
Form 8-K dated April 15, 1998 (Commission File
No. 1-9019) and incorporated herein by
reference)
15 Letter Re Unaudited Interim Financial
Information
27.1 Financial Data Schedule for the three-month
period ended March 31, 1998
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K since the
quarterly period ended December 31, 1997:
The Company filed Current Reports on Form 8-K dated: (i) February 13,
1998 to report the Venezuelan acquisition of a 100% interest in the
operating service contract for the DZO unit, the drilling results of
an exploration well in China and to attach press releases reporting
that five employees were killed in Pakistan, the appointment of
Ambassador Robert Barry to the Company's Board of Directors, the
Company's 1997 year-end and fourth quarter results and the Company's
1998 capital spending budget; (ii) March 2, 1998 to file certain
items that are to be incorporated by reference in the Company's
Registration Statement on Form S-3 (Registration No. 333-31039) (the
"Shelf Registration"); (iii) April 2, 1998 to file certain items to
be incorporated by reference in the Shelf Registration and to report
on the issuance of preferred stock, the replacement of a revolving
credit facility, certain subsidiaries'
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management appointments, and recent developments regarding lower oil
prices; (iv) April 15, 1998 to file certain items that are to be
incorporated by reference in the Company's Shelf Registration and
report on the issuance of debt and a successful development well in
the DZO unit and (v) April 23, 1998 to attach a press release
announcing the Company's first quarter earnings and report on
activities in Azerbaijan and drilling results of an exploration well.
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SIGNATURE
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.
UNION TEXAS PETROLEUM HOLDINGS, INC.
Date: April 24, 1998 By: /s/ DONALD M. MCMULLAN
--------------------------------
Donald M. McMullan
Vice President and Controller
(Chief Accounting Officer
and officer duly authorized to
sign on behalf of the registrant)
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 Certificate of Designation, 7.14% Series A Cumulative
Preferred Stock
4.2 Specimen Form of 7.14% Series A Cumulative Preferred Stock
4.3 Specimen Form of 7.000% MAndatory Putable/remarketable
Securities (MAPS(SM)) due April 15, 2038
10.1 Credit Agreement dated as of March 10, 1998 among Union
Texas Petroleum Holdings, Inc., the Banks and Co-Agents
listed therein and NationsBank of Texas, N.A., as Agent
10.2 Remarketing Agreement between Union Texas Petroleum
Holdings, Inc. and NationsBanc Montgomery Securities LLC
with respect to the MAPS(SM) (Filed as Exhibit 1.4 to the
Company's Form 8-K dated April 15, 1998 (Commission File No.
1-9019) and incorporated herein by reference)
15 Letter Re Unaudited Interim Financial Information
27.1 Financial Data Schedule for the three-month period ended
March 31, 1998