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EXHIBIT 99.2
FOR IMMEDIATE RELEASE
JULY 27, 1999
UNION PACIFIC RESOURCES GROUP INC. REPORTS $15 MILLION PROFIT IN SECOND QUARTER,
$58 MILLION IN FIRST HALF
FORT WORTH, Texas -- Union Pacific Resources Group Inc. (NYSE: UPR) today
announced net income for the second quarter of $15.3 million from continuing
operations, or $.06 per share, compared to a loss of $33.8 million, or $.13 per
share, in the same quarter last year. Discretionary cash flow totaled $250.6
million in the quarter, or $1.00 per share, and $506.4 million, or $2.03 per
share for the first half of the year. The Company completed the first half of
1999 with overall income from continuing operations of $57.6 million, or $.23
per share, contrasted with last year's first half loss of $9.1 million, or $.03
cents per share.
UPR reduced expenses by an impressive 30 percent overall in the second
quarter versus the same quarter last year. Cash operating costs - production and
general and administrative costs, excluding non-recurring items - declined by
$41.9 million, or $.05 per thousand cubic feet of gas equivalent (MCFE). The
debt reduction program begun in 1998 produced an interest expense decline of
$22.3 million in the second quarter and the Company's strategy of concentrating
on lower-risk, high-return development projects in 1999 resulted in a $41
million reduction in exploration costs in the quarter. UPR's cost
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reduction successes, combined with after-tax income of $25.3 million from
non-recurring items and foreign currency exchange gains, helped the Company
achieve a profitable second quarter.
Production volumes averaged 2.2 billion cubic feet equivalent per day
(BCFED), compared to last year's second quarter rate of nearly 2.8 BCFED.
Volumes were on track with Company expectations but lower than last year's rate
due to two factors: the sale of exploration and production assets beginning in
mid-1998, and the Company's scaled-back drilling program. Second quarter prices
for oil, gas and natural gas liquids of $1.71 per MCFE were nearly even with
last year's second quarter average of $1.72. An increase in the price of oil,
from last year's second quarter average of $10.27 per barrel to this year's
$12.03, was offset by a decline in gas prices, from $1.80 per MCF to $1.58.
"We are very pleased with the progress of our 1999 plan to lower operating
costs and reduce debt," UPR Chairman, President and CEO George Lindahl III said.
"We spent only 36 percent of our annual capital budget in the first half because
of concern over commodity prices, yet we were able to hit our second quarter and
first half volume targets. That is proof of the quality of the prospects we are
drilling and of our improved returns. We expect to see similar results as we
ramp up our drilling activity in the second half. We have many promising
exploration and production projects in which to invest the remainder of our 1999
capital budget of $500 million, while also contributing excess cash flow to debt
reduction, as planned."
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UPR's Board of Directors elected Lindahl Chairman, President and CEO on
July 15, 1999, replacing Jack Messman who announced his retirement from UPR.
Lindahl had been UPR's President and Chief Operating Officer since 1996.
Turning to operations, Lindahl said that, "The UPR drilling machine is
picking up steam. We had some terrific successes in the second quarter, most
notably the completion of the Rock Island 4H well in southwest Wyoming's
Frontier formation. We also added two great wells, the Dierking 1H and the
Theldick 1H, to a long list of successes in the Deep Giddings area of the Texas
Chalk. And in Canada, we are nearly two-thirds of the way through our 260-well
shallow-gas development program in the Hatton field.
"Looking ahead," Lindahl continued, "we plan to have around two dozen rigs
working for the rest of the year, up from an average of 14 in the second
quarter. We expect to spud three more Frontier horizontal wells, continue our
drilling program in the Deep Giddings and complete the Hatton field project in
Canada."
Some other highlights of UPR's domestic drilling plan for the rest of the
year include: several high-impact exploratory drilling prospects in South
Louisiana, in-filling of the Masters Creek field, spudding of the next Gomez
well in the deepwater Gulf of Mexico, and a drilling and recompletion program on
the Gulf of Mexico Shelf. In Guatemala, the Company plans to drill two
exploratory wells and two horizontal development wells.
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Union Pacific Resources is one of the nation's largest independent oil and
gas exploration and production companies. Based in Fort Worth, Texas, UPR has
been the #1 domestic driller for the past seven 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 REPORTS ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998,
AND FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999. ACTUAL
RESULTS MAY VARY MATERIALLY.
Media Contact: Investor Contact:
Daniel J. Sullivan Patrick Mooney
Director, Public Affairs VP, Investor Relations
817-321-6527 (817) 321-7169
David Larson
(817) 321-7294
Internet:www.upr.com
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UNION PACIFIC RESOURCES GROUP INC.
STATEMENTS OF INCOME
FOR THE PERIOD ENDED JUNE 30
(DOLLARS IN MILLIONS, EXCEPT WHERE NOTED)
SECOND QUARTER SIX MONTHS
--------------------------- ---------------------------
1999 1998 1999 1998
--------------------------- ---------------------------
Operating revenues:
Oil and gas operations:
Producing properties $ 343.2 $ 437.7 $ 662.2 $ 801.9
Other oil and gas revenues 12.8 27.4 76.7 31.1
------------ ----------- ------------- ----------
Total oil and gas operations 356.0 465.1 738.9 833.0
Minerals 30.7 36.6 62.9 76.7
------------ ----------- ------------- ----------
Total operating revenues 386.7 501.7 801.8 909.7
------------ ----------- ------------- ----------
Operating expenses:
Production 93.2 128.7 183.7 224.0
Exploration 53.5 94.5 105.1 150.6
Minerals 0.1 0.6 0.5 1.3
Depreciation, depletion and amortization 185.2 266.5 368.4 440.8
General and administrative 30.9 24.6 46.5 45.0
Restructuring charge -- -- 14.5 --
------------ ----------- ------------- ----------
Total operating expenses 362.9 514.9 718.7 861.7
Operating income 23.8 (13.2) 83.1 48.0
Other income - net 21.3 14.0 32.7 15.3
Interest expense (50.7) (73.0) (115.0) (107.0)
------------ ----------- ------------- ----------
Income before income taxes (5.6) (72.2) 0.8 (43.7)
Income tax expense (benefit) (20.9) (38.4) (56.8) (34.6)
------------ ----------- ------------- ----------
Income from continuing operations 15.3 (33.8) 57.6 (9.1)
Income (loss) from discontinued operations - net of tax -- 16.5 (23.8) 23.0
Gain on sale of discontinued operations - net of tax -- -- 157.0 --
------------ ----------- ------------- ----------
Net income $ 15.3 $ (17.3) $ 190.8 $ 13.9
============ =========== ============= =========
Per Share:
Income from continuing operations-basic and diluted $ 0.06 $ (0.13) $ 0.23 $ (0.03)
Net Income -basic and diluted $ 0.06 $ (0.07) $ 0.77 $ 0.06
Average shares outstanding (millions) basic 249.1 247.6 248.9 247.6
Average shares outstanding (millions) diluted 249.4 247.6 249.0 247.6
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UNION PACIFIC RESOURCES GROUP INC.
STATEMENTS OF FINANCIAL POSITION
(DOLLARS IN MILLIONS)
ASSETS
AS OF AS OF
JUNE 30 DECEMBER 31
1999 1998
----------------- -----------------
Current assets:
Cash and temporary investments $ 24.9 $ 8.8
Accounts receivable 313.6 261.0
Inventories 55.6 64.6
Other current assets 113.1 107.0
----------------- -----------------
Total current assets 507.2 441.4
----------------- -----------------
Properties - net: 5,761.4 6,093.3
Intangible and other assets 174.2 180.8
Net assets of discontinued operations -- 926.9
----------------- -----------------
Total assets $ 6,442.8 $ 7,642.4
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 207.9 $ 270.5
Advanced payment 107.2 --
Accrued taxes payable 236.4 64.9
Other current liabilities 231.0 157.5
Short-term debt 3.0 853.8
----------------- -----------------
Total current liabilities 785.5 1,346.7
Long-term debt 3,029.7 3,744.9
Deferred income taxes 1,227.9 1,291.6
Other long-term liabilities 526.8 531.0
Common shareholders' equity 872.9 728.2
----------------- -----------------
Total liabilities and shareholders' equity $ 6,442.8 $ 7,642.4
================ ================
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UNION PACIFIC RESOURCES GROUP INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED JUNE 30
(DOLLARS IN MILLIONS)
SECOND QUARTER SIX MONTHS
-------- -------- ---------- ----------
1999 1998 1999 1998
-------- -------- ---------- ----------
Cash provided by operations:
Net income $ 15.3 $ (17.3) $ 190.8 $ 13.9
(Income) loss from discontinued operations -- (16.5) 23.8 (23.0)
Gain on sale of discontinued business - net -- -- (157.0) --
-------- -------- ---------- ----------
Net income from continuing operations 15.3 (33.8) 57.6 (9.1)
Depreciation, depletion and amortization 185.2 266.5 368.4 440.8
Exploration expenses 53.5 94.5 105.1 150.6
Deferred taxes (3.4) (34.1) (24.7) (54.9)
-------- -------- ---------- ----------
Discretionary cash flow 250.6 293.1 506.4 527.4
Working capital changes and other (123.5) 104.1 (157.6) 213.3
-------- -------- ---------- ----------
Cash provided by operations 127.1 397.2 348.8 740.7
-------- -------- ---------- ----------
Cash used by investing activities:
Capital and exploratory expenditures (70.0) (405.1) (180.8) (853.2)
Acquisition of Norcen -- (11.1) -- (2,634.3)
Proceeds from sales of assets 22.4 44.3 222.6 50.3
Proceeds from sales of discontinued operations -- -- 1,359.1 --
Cash provided (used) by discontinued operations (35.0) 325.3 (204.5) 236.6
Proceeds from sale of investments -- 48.4 -- 48.4
Other investing activities-- net -- (6.4) -- --
-------- -------- ---------- ----------
Cash provided (used) by investing activities (82.6) (4.6) 1,196.4 (3,152.2)
-------- -------- ---------- ----------
Cash provided by financing activities:
Dividends paid (12.4) (12.4) (24.8) (24.8)
Debt financing - net (96.8) (327.6) (1,569.7) 2,488.5
Repurchase of common stock (9.4) -- (9.5) (21.6)
Other financings-- net (72.3) 7.3 74.9 2.9
-------- -------- ---------- ----------
Cash provided (used) by financing activities (190.9) (332.7) (1,529.1) 2,445.0
-------- -------- ---------- ----------
Net change in cash and temporary investments $ (146.4) $ 59.9 $ 16.1 $ 33.5
======== ======== ========== ==========
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UNION PACIFIC RESOURCES GROUP INC
VOLUME AND PRICE STATISTICS
FOR THE PERIOD ENDED JUNE 30
SECOND QUARTER SIX MONTHS
1999 1998(a) 1999 1998(a)
----------- ----------- ---------- -----------
Average daily production:
Natural gas: (Mmcfd)
United States 1,026.1 1,210.8 1,034.4 1,175.4
Canada 277.2 365.1 276.7 250.2
Other International 8.3 10.8 8.2 7.3
----------- ----------- ---------- -----------
Total 1,311.6 1,586.7 1,319.3 1,432.9
Natural gas liquids: (Mbbld)
United States 26.8 33.3 24.5 31.6
Canada 1.6 4.8 2.0 3.9
----------- ----------- ---------- -----------
Total 28.4 38.1 26.5 35.5
Crude oil: (Mbbld)
United States 45.4 66.8 46.7 64.3
Canada 28.0 45.8 29.6 31.9
Heavy oil 11.5 18.0 12.1 9.1
Light oil 16.5 27.8 17.5 22.8
Guatemala 22.7 25.8 22.3 18.2
Venezuela 19.5 19.3 20.0 12.8
Other International 4.0 4.6 4.3 3.4
----------- ----------- ---------- -----------
Total 119.6 162.3 122.9 130.6
Total production (Mmcfed) 2,199.6 2,788.8 2,215.6 2,429.8
Average sales prices:
Natural gas: (per Mcf)
United States $ 1.62 $ 1.96 $ 1.64 $ 2.00
Canada 1.45 1.29 1.46 1.32
Other International 1.08 1.06 1.09 1.08
Total 1.58 1.80 1.60 1.87
Natural gas liquids: (per Bbl)
United States 9.35 7.97 8.57 8.85
Canada 8.09 5.47 6.90 5.29
Total 9.28 7.66 8.45 8.45
Crude oil: (per Bbl)
United States 13.77 12.74 12.54 13.62
Canada 10.60 9.12 8.81 9.16
Heavy oil 9.33 3.86 7.71 4.15
Light oil 11.49 12.54 9.58 12.42
Guatemala 12.00 7.44 10.51 6.95
Venezuela 9.57 8.39 9.45 8.60
Other International 14.25 9.65 12.05 10.94
Total 12.03 10.27 10.76 11.04
Total sales price per Mmcfed $ 1.71 $ 1.72 $ 1.65 $ 1.82
(a) Includes volumes associated with properties sold.
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UNION PACIFIC RESOURCES GROUP INC.
OTHER INFORMATION
AS OF JUNE 30
(DOLLARS IN MILLIONS, EXCEPT WHERE NOTED)
SECOND QUARTER SIX MONTHS
1999 1998 1999 1998
--------- ---------- --------- ---------
Discretionary cash flow $ 250.6 $ 293.1 $ 506.4 $ 527.4
Discretionary cash flow - per share $ 1.00 $ 1.18 $ 2.03 $ 2.13
Unit costs: (per Mcfe)
Production costs $ 0.47 $ 0.51 $ 0.46 $ 0.51
DD&A 0.92 1.04 0.91 1.00
General and administrative 0.15 0.10 0.12 0.10
Segment operating income:
E&P $ 25.6 $ ( 23.1) $ 84.7 $ 20.2
Minerals 30.6 36.0 62.4 75.4
Corporate (32.4) ( 26.1) (64.0) (47.6)
--------- ---------- --------- ---------
Total operating income $ 23.8 $ ( 13.2) $ 83.1 $ 48.0
========= ===== ==== ========= =========
DISCRETIONARY
PRE TAX AFTER TAX CASH FLOW
------- --------- ---------
Non-recurring and significant items for second quarter 1999
Foreign currency gains (other income - net) $ 20.5 $ 31.5 $ 20.5
Restricted stock acceleration (production expense) (3.0) (2.5) (2.5)
Restricted stock acceleration
(general & administrative expense) (9.7) (7.9) (7.9)
Columbia Gas Transmission - settlement payment
(other oil and gas revenue) 6.4 4.2 6.4
------- ------- -------
Total non-recurring items and significant items $ 14.2 $ 25.3 $ 16.5
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Note:
Second quarter exploration expense of $53.5 million includes the dry hole
expense for the Venezuelan Delta Centro well.
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