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Exhibit 99.2
FOR IMMEDIATE RELEASE
JANUARY 26, 1998
UNION PACIFIC RESOURCES GROUP INC.
SETS RECORDS IN 1997 FOR DISCRETIONARY CASH FLOW, EARNINGS, CAPITAL
INVESTED,
SALES VOLUMES AND RESERVES
1998 CAPITAL BUDGET ANNOUNCED
FORT WORTH, Texas -- Union Pacific Resources Group Inc. (NYSE-UPR) today
announced that 1997 was a record year for the Company in discretionary cash
flow, earnings, capital invested, sales volumes and proved reserves.
Discretionary cash flow for 1997 was $1,225 million or $4.88 per share, an 18
percent increase compared to 1996 while capital invested in 1997 equaled $1.5
billion, a 74 percent increase over 1996's total of $880 million. Earnings
increased 4 percent over 1996 to $333 million or $1.33 per share, while proved
reserves increased 593 billion cubic feet on an equivalent (Bcfe) basis to
4,100 Bcfe, a 17 percent increase year-over-year. In 1997, the Company
replaced 199 percent of production at an "all-in" finding and development cost
of approximately $.99 per million cubic feet on a gas equivalent basis.
Further, producing property volumes for 1997 averaged 1,599 million cubic feet
equivalent per day (MMcfed) of natural gas, an increase of 10 percent over
1996.
"Our performance in 1997 demonstrates that UPR is committed to growth in
volumes and reserves, and adding value to our shareholders. We have now
increased proved reserves for 10 consecutive years," said Jack L. Messman,
UPR's Chairman and CEO. "In 1998, we will continue with our core strategy of
growing through both drilling and producing property purchases. We also plan to
continue our aggressive growth in the gathering, processing and marketing
business unit."
In 1997, five of the Company's six business units increased production
volumes over the previous year. The increases were led by the Gulf
Onshore/Offshore business unit and the East Texas business unit which
experienced increases of 15 percent and 17 percent respectively. The Gulf
Onshore/Offshore business unit's increase is primarily the result of
exploration success in the Kings Bayou area.
East Texas growth was the result of exploration success in the Cotton
Valley reef play, development drilling in the Carthage field and the
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aggressive drilling program which is underway on the properties acquired from
Castle Energy.
In addition, Austin Chalk average volumes increased 4 percent to 524
MMcfed.
Sales prices averaged $2.17 per Mcfe in 1997 slightly above the 1996
average of $2.14 per Mcfe.
UPR continued to be the nation's number one domestic driller for the sixth
straight year. The Company averaged 50.6 operated rigs for the year and
participated in the drilling approximately of 800 gross wells. In December, the
Company set another record by operating 64 rigs.
FOURTH QUARTER
In the fourth quarter, discretionary cash flow increased 5 percent to
$343.8 million or $1.37 per share, compared to the same period in 1996, while
net income declined 35 percent year-over-year to $74.2 million or $.30 per
share primarily as a result of lower hydrocarbon prices. Average sales prices
totaled $2.12 per Mcfe in the fourth quarter of 1997 as compared to $2.58 per
Mcfe in 1996.
The decline in average price was partially offset as producing property
volumes for the fourth quarter of 1997 increased 6 percent to 1,606 MMcfed.
The Gulf Onshore/Offshore business unit registered a 51 percent increase in
volumes over the same period in 1996 adding over 50 MMcfed in the quarter as
the result of exploration success at Ship Shoal 105 (16 MMcfed) and additional
volumes from Matagorda Island 623 field (18 MMcfed).
Fourth quarter results included seven non-recurring items which
collectively increased net income by $8 million or $.03 per share. Other oil
and gas revenue included approximately $13 million related to gains recognized
in connection with the sale of assets and $6 million related to the favorable
resolution of potential claims associated with the Columbia Gas Transmission
Company bankruptcy settlement received in 1995. Other income included: $10
million related to the favorable resolution of a number of environmental
issues; a gain of approximately $7 million resulting from the sale of certain
marketable securities; favorable settlements totaling $13 million in connection
with a prior period property sale and expenses of approximately $17 million
incurred in connection with UPR's offer to purchase Pennzoil Company, which was
terminated in the fourth quarter. Finally, a FASB 121 asset impairment charge
of approximately $20 million was recorded in the fourth quarter related to four
small non-core fields.
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1998 CAPITAL BUDGET
In addition to its fourth quarter and year end results, the Company also
announced its 1998 capital budget of $1.6 billion. Of this amount, UPR plans
to invest approximately $1.4 billion on exploration and production activities
with the remaining $200 million allocated to plants, pipelines and marketing
projects.
Union Pacific Resources is one of the nation's largest domestic
independent oil and gas exploration and production companies. Based in Fort
Worth, Texas, UPR has been the #1 domestic driller for the past six years.
THIS PRESS RELEASE, OTHER THAN HISTORICAL FINANCIAL
INFORMATION, CONTAINS FORWARD LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES INCLUDING PLANNED CONSTRUCTION AND
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 SEPTEMBER 30,
1997. ACTUAL RESULTS MAY VARY MATERIALLY.
Media Contact: Analyst Contact:
Pat Doyle Mike Liebschwager
Director, Public Affairs Director, Investor Relations
817-877-6527 817-877-6531
Internet:www.upr.com
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UNION PACIFIC RESOURCES GROUP INC.
STATEMENT OF INCOME
For the Period Ended December 31
(Dollars in Millions, Except Per Share Figures)
FOURTH QUARTER % TWELVE MONTHS %
1997 1996 Inc(Dec) 1997 1996 Inc(Dec)
------------------------------------------------------------------------------
Operating revenues:
Oil and gas operations:
Producing properties $ 314.4 $ 352.7 $1,281.2 $1,133.3
Plants, pipelines and marketing 123.9 139.8 443.3 503.8
Other oil and gas revenues 26.5 41.5 60.4 65.0
------- ------- -------- --------
Total oil and gas operations 464.8 534.0 1,784.9 1,702.1
Minerals 34.6 32.3 139.8 128.9
------- ------- -------- --------
Total operating revenues 499.4 566.3 (12)% 1,924.7 1,831.0 5%
------- ------- -------- --------
Operating expenses:
Production 75.9 69.7 292.6 259.5
Exploration 54.1 50.5 204.7 144.6
Plants, pipelines and marketing 89.6 91.0 285.2 290.0
Minerals (0.4) 1.9 3.4 8.0
Depreciation, depletion and amortization 163.8 149.8 568.1 533.9
General and administrative 17.1 21.5 75.5 68.4
------- ------- -------- --------
Total operating expenses 400.1 384.4 4% 1,429.5 1,304.4 10%
------- ------- -------- --------
Operating income 99.3 181.9 (45)% 495.2 526.6
Other income (expense) - net 14.7 (1.5) 24.3 (3.4)
Interest expense (17.6) (12.6) (53.1) (50.6)
------- ------- -------- --------
Income before income taxes 96.4 167.8 466.4 472.6
Income taxes (22.2) (53.5) (133.4) (151.8)
------- ------- -------- --------
Net income $ 74.2 $ 114.3 (35)% $ 333.0 $ 320.8 4%
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Discretionary cash flow (1) $ 343.8 $ 326.1 5% $1,225.5 $1,036.3 18%
======= ======= ======== ========
Basic earnings per share $ 0.30 $ 0.46 (35)% $ 1.33 $ 1.29 3%
Diluted earnings per share $ 0.30 $ 0.46 (35)% $ 1.33 $ 1.28 4%
Discretionary cash flow per share $ 1.37 $ 1.30 5% $ 4.88 $ 4.14 18%
Average shares outstanding (millions) 249.7 249.8 250.0 249.2
(1) Discretionary cash flow for any period means the sum of net income;
depreciation, depletion and amortization; exploration expenses; and
deferred taxes.
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UNION PACIFIC RESOURCES GROUP INC.
OPERATING STATISTICS
For the Period Ended December 31
FOURTH QUARTER % AS OF DECEMBER 31 %
1997 1996 Inc(Dec) 1997 1996 Inc(Dec)
----------------------------------------------------------------------------
COMBINED OIL AND GAS OPERATIONS
Average daily sales volumes:
Natural gas (MMcfd) 1,120.6 1,053.8 6% 1,132.8 1,007.0 12%
Natural gas liquids (MBbld) 73.2 71.7 2% 71.6 68.3 5%
Crude oil (MBbld) 57.4 50.2 14% 52.9 50.6 4%
Total (MMcfed) 1,904.4 1,785.4 7% 1,879.3 1,720.2 9%
Average sales prices:
Natural gas (per Mcf) $ 1.93 $ 2.33 (17)% $ 2.01 $ 1.86 8%
Natural gas liquids (per Bbl) 11.61 16.36 (29)% 11.61 12.42 (7)%
Crude oil (per Bbl) 17.89 19.60 (9)% 18.36 18.84
Total (per Mcfe) 2.12 2.58 (18)% 2.17 2.14
OPERATIONS DETAIL
Producing properties:
Average daily production:
Natural gas (MMcfd) 1,077.7 1,029.9 5% 1,102.3 980.3 12%
Natural gas liquids (MBbld) 30.6 31.0 29.9 28.5 5%
Crude oil (MBbld) 57.4 50.2 14% 52.9 50.6 4%
Total (MMcfed) 1,605.5 1,517.1 6% 1,598.8 1,454.9 10%
Average sales prices:
Natural gas (per Mcf) $ 1.90 $ 2.32 (18)% $ 2.00 $ 1.86 8%
Natural gas liquids (per Bbl) 11.34 14.87 (24)% 11.20 11.39
Crude oil (per Bbl) 17.89 19.60 (9)% 18.36 18.84
Average costs:
Production costs (per Mcfe) $ 0.51 $ 0.50 $ 0.50 $ 0.49
DD&A (per Mcfe) 0.96 0.94 0.84 0.87
General and administrative cost (per Mcfe) 0.10 0.13 (25)% 0.11 0.11
Plants, pipelines and marketing:
Average daily sales volumes attributable
to gas plant ownership:
Natural gas (MMcfd) 42.9 23.9 79% 30.5 26.7 14%
Natural gas liquids (MBbld) 42.7 40.7 5% 41.7 39.8 5%
Total (MMcfed) 298.8 268.3 11% 280.5 265.4 6%
Average sales prices:
Natural gas (per Mcf) $ 2.75 $ 2.56 7% $ 2.40 $ 2.01 19%
Natural gas liquids (per Bbl) 11.81 17.49 (32)% 11.91 13.16 (9)%
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UNION PACIFIC RESOURCES GROUP INC.
STATEMENT OF CASH FLOWS
For the Period Ended December 31
(Dollars in Millions)
FOURTH QUARTER % AS OF DECEMBER 31 %
1997 1996* Inc(Dec) 1997 1996* Inc(Dec)
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Cash provided by operations:
Net income $ 74.2 $114.3 (35)% $ 333.0 $ 320.8 4%
Depreciation, depletion and amortization 163.8 149.8 568.1 533.9
Exploration expenses 54.1 50.5 204.7 144.6
Deferred taxes 51.7 11.5 119.7 37.0
------ ------ --------- --------
Discretionary cash flow 343.8 326.1 5% 1,225.5 1,036.3 18%
Working capital changes and other (181.5) (65.4) (256.7) (45.9)
------ ------ --------- --------
Cash provided by operations 162.3 260.7 (38)% 968.8 990.4 (2)%
------ ------ --------- --------
Investing activities:
Capital investments and exploratory
expenditures (342.0) (264.6) 29% (1,352.3) (880.3) 54%
Acquisition of Highlands Gas Corporation -- -- (179.4) --
Proceeds from sales of properties 22.3 5.3 44.6 30.2
Other investing activities - net (11.3) (1.0) (17.7) (2.8)
------ ------ --------- --------
Cash used by investing activities (331.0) (260.3) 27% (1,504.8) (852.9) 76%
------ ------ --------- --------
Financing activities:
Dividends paid (12.5) (12.5) (50.0) (49.8)
Advances from (to) Union Pacific Corporation -- (444.4) -- (567.8)
Debt Financings 255.2 553.1 563.5 646.9
Debt Repaid (2.6) (9.5) (3.9) (77.5)
Purchase of Treasury Stock (49.9) (2.4) (52.4) (3.4)
Other financings - net 5.4 6.8 30.5 5.4
------ ------ --------- --------
Cash provided(used) by financing activities 195.6 91.1 487.7 (46.2)
------ ------ --------- --------
Net change in cash $ 26.9 $ 91.5 (71)% $ (48.3) $ 91.3 (153)%
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* Certain classifications have been restated to conform with current year
presentation.
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UNION PACIFIC RESOURCES GROUP INC.
STATEMENT OF FINANCIAL POSITION
As of December 31
(Dollars in Millions)
1997 1996
-------- --------
Assets:
Current assets $ 576.8 $ 586.3
Properties - net 3,665.4 2,972.4
Intangible and other assets 230.0 90.2
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Total $4,472.2 $3,648.9
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Liabilities and shareholders' equity:
Current liabilities $ 557.7 $ 612.8
Debt due after one year 1,230.6 670.9
Deferred income taxes 552.9 434.7
Other liabilities 370.3 416.2
Shareholders' equity 1,760.7 1,514.3
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Total $4,472.2 $3,648.9
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