SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) April 25, 2002
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UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
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(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
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(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
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(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events
First Quarter 2002 Results
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Unocal Corporation's net earnings for the first quarter of 2002 were $22
million, or 9 cents per share (diluted). This compared to net earnings of $295
million, or $1.18 per share (diluted), for the first quarter of 2001.
For the Three Months
Ended March 31,
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Millions of dollars 2002 2001
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Earnings from continuing operations $ 22 $ 292
Earnings from discontinued operations - 4
Cumulative effect of accounting change - (1)
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Net earnings $ 22 $ 295
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Earnings from continuing operations were $22 million, or 9 cents per share
(diluted), compared to $292 million, or $1.16 per share (diluted), for the same
period a year ago. The decrease was primarily due to lower prices for natural
gas and liquids (crude oil, condensate and natural gas liquids). The Company's
worldwide average natural gas price, including a benefit of 9 cents per thousand
cubic feet (mcf) from hedging activities, was $2.39 per mcf in the first quarter
of 2002, which was a decrease of $2.02 per mcf, or 46 percent, from the same
period a year ago. In the first quarter of 2002, the Company's worldwide average
liquids price was $18.28 per barrel, which was a decrease of $6.35 per barrel,
or 26 percent, from the same period a year ago. The lower natural gas prices
reduced net earnings by approximately $160 million, while the lower liquids
prices reduced net earnings by approximately $50 million. The first quarter of
2002 was also impacted by lower production compared to the same period a year
ago, principally in the Lower 48 operations. The lower worldwide production
reduced net earnings by approximately $85 million. In the first quarter of 2002,
$3 million in higher pension expense compared to the same period a year ago also
impacted net earnings. All of these negative factors were partially offset by
$13 million in lower after-tax losses in mark-to-market accruals for non-hedge
commodity derivatives and $10 million in lower after-tax provisions for
environmental and litigation matters (the first quarter of 2002 included $21
million while the first quarter of 2001 included $31 million).
The first quarter of 2001 included $4 million, or 2 cents per share (diluted),
from discontinued operations, related to the Company's 1997 sale of its former
West Coast refining, marketing and transportation assets.
In the first quarter of 2001, the Company recorded a one-time non-cash $1
million after-tax charge consisting of the cumulative effect of a change in
accounting principle related to the initial adoption of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities".
Total revenues from continuing operations for the first quarter of 2002 were
$1.04 billion, compared with $2.21 billion for the first quarter of 2001. The
lower 2002 revenues primarily reflected lower commodity prices and lower crude
oil marketing activity by the Company's Trade segment.
Capital expenditures in the first quarter of 2002 were $390 million, compared
with $360 million, excluding major acquisitions, in the first quarter of 2001.
In the first quarter of 2001, the Company's major acquisitions included the
acquisition by the Company's Pure Resources, Inc., subsidiary of properties from
International Paper Company for $261 million.
The Company's total consolidated debt, including current maturities, at the end
of the first quarter of 2002 was $3.18 billion, compared with $2.91 billion at
the end of 2001. The debt-to-total capitalization ratio was 47 percent at the
end of the first quarter of 2002 compared to 44 percent at the end of 2001.
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OPERATING HIGHLIGHTS (UNAUDITED)
For the Three Months
Ended March 31,
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2002 2001
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North America Net Daily Production
Liquids (thousand barrels)
Lower 48 (a) (b) 56 53
Alaska 25 24
Canada 18 15
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Total liquids 99 92
Natural gas - dry basis (million cubic feet)
Lower 48 (a) (b) 746 874
Alaska 101 138
Canada 90 140
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Total natural gas 937 1,152
North America Average Prices (c)
Liquids (per barrel)
Lower 48 $ 18.48 $ 26.75
Alaska $ 14.54 $ 22.76
Canada $ 16.52 $ 20.46
Average $ 17.19 $ 24.60
Natural gas (per mcf)
Lower 48 $ 2.47 $ 6.93
Alaska $ 1.57 $ 1.20
Canada $ 2.25 $ 4.22
Average $ 2.35 $ 5.87
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International Net Daily Production (d)
Liquids (thousand barrels)
Far East 53 50
Other (a) 20 19
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Total liquids 73 69
Natural gas - dry basis (million cubic feet)
Far East 822 793
Other (a) 75 57
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Total natural gas 897 850
International Average Prices (c)
Liquids (per barrel)
Far East $ 19.28 $ 24.25
Other $ 21.96 $ 25.55
Average $ 19.86 $ 24.67
Natural gas (per mcf)
Far East $ 2.44 $ 2.48
Other $ 2.48 $ 2.89
Average $ 2.44 $ 2.50
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Worldwide Net Daily Production (a) (b) (d)
Liquids (thousand barrels) 172 161
Natural gas - dry basis (million cubic feet) 1,834 2,002
Barrels oil equivalent (thousands) 477 495
Worldwide Average Prices (c)
Liquids (per barrel) $ 18.28 $ 24.63
Natural gas (per mcf) $ 2.39 $ 4.41
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(a) Includes proportional shares of production of equity investees.
(b) Includes amounts attributable to minority interests of :
Liquids 9 8
Natural gas 98 89
Barrels oil equivalent 25 23
(c) Average prices include hedging gains and losses but exclude gains or losses
on derivative positions not accounted for as hedges, the ineffective
portion of hedges and other Trade margins.
(d) International production is presented utilizing the economic
interest method.
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The following table includes a reconciliation of consolidated net earnings to
adjusted after-tax earnings. Special items represent certain significant
transactions, the results of which are included in net earnings, that management
determines to be unrelated to or not representative of the Company's ongoing
operations. The purpose of the table is to provide the investment community
supplemental financial data in addition to the data prepared in accordance with
generally accepted accounting principles.
For the Three Months
Ended March 31,
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Millions of dollars 2002 2001
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Net earnings (a) $ 22 $ 295
Less: Earnings from discontinued operations - 4
Less: Cumulative effect of accounting change - (1)
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Earnings from continuing operations 22 292
Special items:
Continuing operations
Environmental and litigation provisions (21) (31)
Trading derivatives -- non-hedging (4) (17)
Insurance settlements related to environmental issues 2 -
Asset sales 2 -
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Total special items from continuing operations (21) (48)
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Adjusted after-tax earnings (before special items) (a) $ 43 $ 340
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(a) Includes amounts attributable to minority interests of: $ (1) $ (16)
Second Quarter and Full Year 2002 Outlook
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The Company estimates that its net earnings per share to be between 45 to 55
cents per share in the second quarter of 2002, reflecting an anticipated
increase in commodity prices from the first quarter. The second quarter forecast
assumes average NYMEX benchmark prices of $26.35 per barrel of crude oil and
$3.55 per million British thermal units (MMBtus) for North America natural gas.
The second quarter forecasted earnings are expected to change 4 cents per share
for every $1 change in its average worldwide realized price for crude oil and 2
cents per share for every 10-cent change in the Company's average realized North
America natural gas price. The Company estimates that net worldwide daily
production for the second quarter will average between 480,000 and 490,000
barrels-of-oil equivalent (BOE). The second quarter forecast also includes
pre-tax dry hole costs of $20 to $30 million.
For the full-year 2002, the Company estimates that its net earnings per share to
be between $1.62 to $1.82 cents per share. The full-year forecast assumes
average NYMEX benchmark prices of $24.80 per barrel of crude oil and $3.35 per
MMBtus for North America natural gas. The full-year forecasted earnings are
expected to change 16 cents per share for every $1 change in its average
worldwide realized price for crude oil and 8 cents per share for every 10-cent
change in the Company's average realized North America natural gas price. The
Company estimates that net worldwide daily production for the full-year will
average between 490,000 and 500,000 BOE. The full-year forecast also includes
pre-tax dry hole costs of $120 to $130 million.
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Forward-looking statements and estimates regarding projected earnings, commodity
prices, dry hole costs, production levels and capital expenditures, in this
filing are based on assumptions about operational, market, competitive,
regulatory, environmental, political and other considerations. Actual results
could differ materially as a result of factors discussed in Unocal's 2001
Annual Report on Form 10-K and subsequent reports.
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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.
UNOCAL CORPORATION
(Registrant)
Date: April 25, 2002 By: /s/ JOE D. CECIL
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Joe D. Cecil
Vice President and Comptroller
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