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) January 27, 2004
------------------------
UNOCAL CORPORATION
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
--------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
--------------------------------------------------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
--------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events.
Fourth Quarter 2003 and Year-To-Date Results
--------------------------------------------
Unocal Corporation's (the "Company") preliminary net earnings were $180 million,
or 68 cents per share (diluted), in the fourth quarter of 2003 compared with $96
million, or 38 cents per share (diluted), in the fourth quarter of 2002. For the
full year of 2003, preliminary unaudited net earnings were $643 million, or
$2.46 per share (diluted), compared with $331 million, or $1.34 per share
(diluted) in 2002.
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------------------------------
Millions of dollars 2003 2002 2003 2002
--------------------------------------------------------------------------------
Earnings from continuing operations $ 172 $ 96 $ 710 $ 330
Earnings from discontinued operations 8 - 16 1
Cumulative effects of accounting changes - - (83) -
--------------------------------------------------------------------------------
Net earnings $ 180 $ 96 $ 643 $ 331
================================================================================
Continuing Operations
---------------------
Fourth Quarter Results: Earnings from continuing operations increased by $76
million in the fourth quarter of 2003 compared to the same quarter a year ago,
primarily reflecting improved results from the Company's exploration and
production operations, due to higher worldwide natural gas and liquids prices.
Higher worldwide commodity prices increased net earnings by approximately $90
million. The Company's worldwide average realized natural gas price, with a 14
cents gain from hedging activities, was $3.65 per Mcf in the current quarter.
This was an increase of 55 cents per Mcf, or 18 percent, from the $3.10 per Mcf
realized during the same period a year ago, which included a 2 cent loss per Mcf
from hedging activities. In the current quarter, the Company's worldwide average
realized liquids price, with a 19 cent gain from hedging activities, was $28.33
per Bbl, which was an increase of $2.89 per Bbl, or 11 percent, from the same
period a year ago. The Company's hedging program had no impact on the average
realized liquids price in the fourth quarter of 2002.
The fourth quarter of 2003 also benefited from a Canadian statutory tax rate
change which added $29 million to net earnings. In addition, the Company
recorded $17 million after-tax related to an insurance settlement for the
recovery of amounts previously paid out for environmental pollution claims and
related costs. The Company's after-tax environmental and litigation expenses
were $27 million in the current quarter of 2003, compared with $29 million in
the same period a year ago. The fourth quarter of 2002 included $9 million
after-tax for uninsured losses due to hurricane damage in the Gulf of Mexico and
$8 million after-tax of costs related to the acquisition of the outstanding
minority interest in Pure Resources, Inc. ("Pure"), common stock.
The positive variance factors discussed in the previous paragraph were partially
offset by $28 million after-tax in premiums incurred for the early redemption of
long-term debt in 2003. In addition, lower North America production reduced net
earnings by approximately $20 million in the current quarter compared with the
same period a year ago. North America liquids production averaged 75,000 Bbl/d
in the current quarter, down from 87,000 Bbl/d in the same period a year ago,
while natural gas production averaged 655 MMcf/d in the current quarter, down
from 818 MMcf/d in the same period a year ago. Most of the production decline
was due to the divestiture of various properties in the Gulf of Mexico, onshore
U.S. and Canada during 2003. Higher pension related expenses also reduced net
earnings by approximately $10 million in the current quarter compared to the
same period a year ago. In addition, the fourth quarter of 2002 included
approximately $25 million in higher net after-tax gains from asset sales.
-1-
Full Year Results: Earnings from continuing operations were $710 million in 2003
compared to $330 million for 2002. Higher worldwide commodity prices increased
net earnings by approximately $480 million. The Company's worldwide average
realized natural gas price, including a loss of 7 cents per Mcf from hedging
activities, was $3.66 per Mcf in 2003. This was an increase of 85 cents per Mcf,
or 30 percent, from the $2.81 per Mcf, including a benefit of 2 cents per Mcf
from hedging activities, realized in 2002. In 2003, the Company's worldwide
average realized liquids price was $27.60 per Bbl, which was an increase of
$4.46 per Bbl, or 19 percent, from a year ago. The Company's hedging program
lowered the average realized liquids price by 10 cents per Bbl in 2003 while
2002 included a gain of one cent per Bbl from hedging activities. International
production increases also contributed approximately $35 million in higher
earnings, primarily from higher Indonesia and Thailand liquids and natural gas
production. In 2003, asset sales added after-tax gains of approximately $65
million, which included the sale of the Company's equity interests in Matador
Petroleum Corporation ("Matador") and Tom Brown Inc. ("Tom Brown"), and other
asset divestitures in North America, compared to gains of approximately $26
million in 2002. The geothermal and power operations segment added $20 million
in earnings improvement in 2003 as compared to 2002, primarily as a result of
the amended Geothermal Salak energy sales agreements in Indonesia and improved
results from the Company's equity interests in gas-fired power plants in
Thailand. The 2003 results included a $4 million after-tax gain on
mark-to-market accruals and realized gains/losses for non-hedge commodity
derivatives recorded by the Company's Northrock subsidiary in Canada, compared
with a $6 million after-tax loss in 2002. The 2003 results also benefited from
the Canadian statutory tax rate change which added $29 million to net earnings.
In addition, the Company recorded $17 million after-tax related to insurance
settlements compared to $2 million after-tax for 2002. The 2002 results included
$9 million after-tax for uninsured losses due to hurricane damage in the Gulf of
Mexico and $8 million after-tax of costs related to the acquisition of the
outstanding minority interest in Pure common stock.
The positive variance factors discussed in the previous paragraph were partially
offset by lower North America production, higher pension related expenses,
higher asset impairments, the premiums paid for the early redemption of
long-term debt and higher exploration expenses including dry hole costs, which
reduced net earnings by approximately $80 million, $35 million, $30 million, $30
million and $15 million, respectively, in 2003 compared with 2002. North America
liquids production averaged 81,000 Bbl/d in 2003, down from 94,000 Bbl/d a year
ago, while natural gas production averaged 763 MMcf/d down from 886 MMcf/d for
2002. Most of the production decline was due to natural declines in existing
fields in the Gulf of Mexico and the divestiture of various properties in the
Gulf of Mexico, onshore U.S. and Canada. In addition, the Company's minerals
operations recorded approximately $20 million after-tax in lower earnings for
2003 as compared to the same period a year ago due primarily to lower margins
and lower Brazil earnings.
After-tax environmental and litigation expenses were $110 million in 2003,
compared with $91 million in 2002, reflecting higher litigation expenses
including related outside support costs. The 2003 results included the
company-wide $24 million restructuring charge, while the same period a year ago
included a $12 million restructuring charge for the Gulf Region business unit.
Discontinued Operations
-----------------------
Preliminary unaudited earnings from discontinued operations were $16 million in
2003 and $1 million in 2002. The amounts in both years related to the Company's
1997 sale of its former West Coast refining, marketing and transportation
assets. The sales agreement contained a provision calling for payments to the
Company for price differences between California Air Resources Board Phase 2
gasoline and conventional gasoline. This provision of the agreement terminated
at the end of 2003.
-2-
Cumulative Effects of Accounting Changes
----------------------------------------
In the first quarter of 2003, the Company recorded a non-cash $83 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 ("SFAS") No. 143, "Accounting for Asset Retirement Obligations." The
Company also increased its accrued abandonment and restoration liabilities by
$268 million and increased its net properties by $138 million on the
consolidated balance sheet as a result of the adoption of SFAS No.143, as of
January 1, 2003.
Financial Condition
-------------------
Net Cash provided by operating activities was $1.95 billion in 2003 compared
with $1.57 billion in 2002. The increase principally reflected the effects of
higher worldwide commodity prices.
Capital expenditures were $1.72 billion in 2003 compared with $1.67 billion in
the same period a year ago.
Pre-tax proceeds from asset sales were $299 million in the fourth quarter, and
the total for 2003 was $642 million. In 2003, the Company received $150 million
from the sale of its equity interest shares held in Tom Brown and $80 million
from the sale of its equity interest in Matador. The Company also completed the
sale of various properties in the Gulf of Mexico, onshore U.S. and Canada, which
netted the Company approximately $360 million in proceeds. Other miscellaneous
properties netted the Company $50 million in proceeds.
The Company's total consolidated debt, including current maturities, at December
31, 2003, was $2.88 billion, compared with $3.0 billion at year-end 2002. Cash
and cash equivalents on hand totaled $404 million at December 31, 2003, up from
$168 million at the end of 2002.
In 2003, the Company retired approximately $500 million in net long-term debt
and other financings. Pursuant to Financial Accounting Standards Board
Interpretation 46 ("Consolidation of Variable Interest Entities"), the Company
consolidated in 2003 the long-term debt of an affiliate that operates geothermal
steam-fired power plants in Indonesia. At December 31, 2003, the balance sheet
included $74 million related to this debt.
-3-
First Quarter 2004 Outlook
--------------------------
The Company's current net worldwide daily production estimate for the first
quarter of 2004 is between 410,000 and 420,000 barrels-of-oil equivalent
("BOE"). Based on current market prices, the Company's net earnings for the
first quarter are expected to change $8 million for every $1 change in the
Company's average worldwide realized price for crude oil and $3 million for
every 10-cent change in its average realized North America natural gas price,
excluding the effect of hedging activities. For the first quarter of 2004, the
Company has hedged 41 million MMBtu (million British thermal units) of North
America natural gas production and 3 million Bbl of North America crude oil,
together representing approximately 60 percent of expected North America BOE
production volume. These first quarter hedges include fixed price sales for 41
million MMBtu of natural gas at $6.25 per MMBtu and 2.8 million Bbl of crude oil
at $30.14 per Bbl, in addition to crude oil collars between $28.40 and $24.00
per Bbl on 180,000 Bbl. The Company also forecasts first quarter pre-tax dry
hole costs of $40 million to $50 million.
2004 Capital Expenditures
-------------------------
Capital expenditures for 2004 are currently forecast at approximately $1.93
billion, which excludes $80 million of capitalized interest. This compares with
approximately $1.66 billion in 2003, which excluded $60 million in capitalized
interest. About 94 percent of the total capital spending plan is for exploration
and production projects, with about two-thirds targeted for outside North
America.
Nearly 50 percent of the estimated spending is earmarked principally for large,
mostly international, crude oil and natural gas development projects that are
expected to bring on new production in 2004 and 2005. Major international
projects include Thailand oil and gas development, Indonesia deepwater
development, Bangladesh gas field development, Caspian Sea oil development, and
China's Xihu Trough natural gas development. In the U.S., the Company will be
completing development of the Mad Dog field and beginning development of the K2
field in the deepwater Gulf of Mexico.
For 2004, the Company expects to maintain an exploration capital budget of about
$325 million. The primary focus will be deepwater Gulf of Mexico and Indonesia.
Exploration spending on the deep shelf program in the Gulf of Mexico represents
about 10 percent of the overall spending plan and will be less than one-half of
the 2003 level.
-4-
2003 Reserve Replacement and FD&A Results
-----------------------------------------
The Company estimates its preliminary year-end 2003 proved oil and gas reserves
to be 1.765 billion BOE, compared with 1.774 billion BOE at the end of 2002. In
2003, the Company replaced production and nearly offset the sale of 98 million
BOE. Including the net effect of sales, preliminary reserve replacement was 95
percent of 2003 production, with preliminary costs for new reserves measured as
both finding and development ("F&D") and finding, development and acquisition
("FD&A") of approximately $6.90 per BOE.
The Company's reserve replacement performance reflects continued strength in
legacy areas including Thailand, U.S. Mid-Continent, Canada, and Alaska. The
Company also progressed in commercializing some of its large backlog of
discovered oil and gas in Bangladesh and Indonesia. For the Company's
International operations, FD&A was less than $5.00 per BOE. In 2003, the Company
booked new reserves at the Moulavi Bazar field in Bangladesh and at the Ranggas
field in the deepwater Kutei Basin offshore Indonesia. FD&A for North America,
excluding deep water, was about $9.90 per BOE, which is above the Company's
stated goal of $8.00 per BOE for those businesses. The Alaska, U.S.
Mid-Continent and Canada programs met or exceeded the $8.00 goal, and the
Company will continue to fund those programs at a comparable level in 2004. The
exploration program in the Gulf of Mexico shelf, including the deep shelf
program, had unacceptable returns as a result of lower than expected discovery
volumes and drilling cost overruns. In 2004, overall exploration capital
spending for the Gulf of Mexico shelf will be cut by approximately 50 percent
from the 2003 level. The Company booked 7 million BOE in the deepwater Gulf of
Mexico for the Mad Dog field development, which is expected to be on production
in 2005, and the K2 field, which is planned for development.
During 2003, the Company added proved reserves of 203 million BOE from
discoveries and extensions. It also made upward revisions of 43 million BOE
because of reservoir performance. This was offset partially by 4 million BOE in
negative price revisions attributable to changes in crude oil prices for
reserves held under production-sharing contracts ("PSCs").
About 50 percent of the Company's proved reserves are in the Proved Undeveloped
("PUD") category. These relate to discovered reserves near existing
infrastructure or large development projects that are currently underway.
Roughly 40 percent of the PUDs are related to specific projects such as
deepwater developments in the Gulf of Mexico and Indonesia, and the Company's
interest in the Azerbaijan International Operating Company ("AIOC"). The
majority of the remaining PUDs relate to Thailand. The Company delineates
undeveloped reserves there to meet the growing long-term sales commitments and
to respond to market opportunities as the swing producer. The Company does not
spend the capital to develop those reserves until deliverability is required by
the market (just-in-time development). In 2003, Unocal Thailand, Ltd. ("Unocal
Thailand"), reached preliminary agreement to extend the gas sales agreements and
increase the Company's net daily contract quantity by approximately 50 percent
to 920 MMcf/d beyond 2006.
The Company's 2003 reserves did not include resources from a number of
previously announced major discoveries - Gehem, Gula and Gendalo in Indonesia;
Vietnam; Arthit in Thailand; Bibiyana in Bangladesh; Xihu Trough in China; or
the Champlain, Trident, St. Malo, and Puma deepwater Gulf of Mexico discoveries,
which are all in active appraisal.
Unocal preliminary estimated proved reserves
of crude oil and natural gas (MMBOE)
As of December 31, 2002 1,774
Discoveries and extensions 203
Improved recovery 10
Revisions 39
Purchases 6
Sales (98)
Production (169
As of December 31, 2003 1,765
-5-
Reserve due diligence
---------------------
The Company employs an extensive auditing process to assure quality reserve
reporting. The reserves are calculated and reviewed by the individual business
unit team of degreed engineering and geology professionals, and the results are
then reviewed by a corporate team. For 2003, more than three-fourths of the
Company's reserves were reviewed by the corporate team, which is composed of
individuals who have no management ties to the business units nor do they have
any reserve volume goals. In addition, the auditing team includes one member
from an independent third party engineering firm. The Company's auditing team
examines the existing reserve base on a rotating basis once every three years.
All material changes in reserves each year are reviewed by the company's
management committee. As a matter of policy, the Company does not book reserves
without management's commitment to develop the project, which requires an
established market for the resource.
Cautionary Statement
--------------------
This filing contains certain forward-looking statements about Unocal's future
production rates, commodity prices, dry hole costs, estimates of proved
reserves, future operations, capital expenditures, possible development
activities, drilling plans, business transactions and other matters. These
statements are not guarantees of future performance. The statements are based
upon Unocal's current expectations and beliefs and are subject to a number of
known and unknown risks and uncertainties that could cause actual results to
differ materially from those described in the forward looking statements.
Actual results could differ materially as a result of changes in commodity
prices, the levels of the Company's oil and gas production, development and
exploratory drilling results, the amounts of the Company's operating cash flow
and other capital resources available to fund its capital expenditures,
government approvals, regulatory, geological, operating and economic
considerations, and other factors disclosed on pages 56 to 68 of Unocal's
2002 Annual Report on Form 10-K.
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: February 6, 2004 By: /s/ JOE D. CECIL
------------------ -------------------------------
Joe D. Cecil
Vice President and Comptroller
-6-
CONSOLIDATED EARNINGS (UNAUDITED) UNOCAL CORPORATION
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
--------------------------------------------------
Millions of dollars except per share amounts 2003 2002 2003 2002
-------------------------------------------------------------------------------------------------------------------
Revenues
Sales and operating revenues $ 1,578 $ 1,529 $ 6,395 $ 5,224
Interest, dividends and miscellaneous income 7 14 25 31
Gain on sales of assets 4 40 119 42
-------------------------------------------------------------------------------------------------------------------
Total revenues 1,589 1,583 6,539 5,297
Costs and other deductions
Crude oil, natural gas and product purchases 497 577 2,126 1,701
Operating expense 375 389 1,340 1,338
Administrative and general expense 61 37 260 151
Depreciation, depletion and amortization 242 249 988 973
Asset impairments 7 20 93 47
Dry hole costs 33 26 128 107
Exploration expense 69 66 251 246
Interest expense 71 45 190 179
Property and other operating taxes 20 19 81 60
Distributions on convertible preferred securities of subsidiary trust 9 9 33 33
-------------------------------------------------------------------------------------------------------------------
Total costs and other deductions 1,384 1,437 5,490 4,835
Earnings from equity investments 42 31 192 154
-------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before
income taxes and minority interests 247 177 1,241 616
-------------------------------------------------------------------------------------------------------------------
Income taxes 74 77 522 280
Minority interests 1 4 9 6
-------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations 172 96 710 330
-------------------------------------------------------------------------------------------------------------------
Earnings from discontinued operations 8 - 16 1
Cumulative effects of accounting changes (a) - - (83) -
-------------------------------------------------------------------------------------------------------------------
Net earnings $ 180 $ 96 $ 643 $ 331
===================================================================================================================
Basic earnings per share of common stock (b)
Continuing operations $ 0.66 $ 0.38 $ 2.75 $ 1.34
Net earnings $ 0.69 $ 0.38 $ 2.49 $ 1.34
Diluted earnings per share of common stock (c)
Continuing operations $ 0.65 $ 0.38 $ 2.70 $ 1.34
Net earnings $ 0.68 $ 0.38 $ 2.46 $ 1.34
Cash dividends declared per share of common stock $ 0.20 $ 0.20 $ 0.80 $ 0.80
-------------------------------------------------------------------------------------------------------------------
(a) Net of tax (benefit) $ - $ - $ (48) $ -
(b) Basic weighted average shares outstanding (in thousands) 259,521 253,526 258,563 246,759
(c) Diluted weighted average shares outstanding (in thousands) 274,025 254,775 272,722 247,679
-7-
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) UNOCAL CORPORATION
At December 31,
-----------------------------
Millions of dollars 2003 2002
---------------------------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 404 $ 168
Other current assets - net 1,587 1,207
Investments and long-term receivables - net 893 1,044
Properties - net 8,324 7,879
Goodwill 131 122
Other assets 459 426
---------------------------------------------------------------------------------------------------
Total assets $11,798 $10,846
===================================================================================================
Liabilities and Stockholders' Equity
Current liabilities (a) $ 2,085 $ 1,632
Long-term debt and capital leases 2,635 3,002
Deferred income taxes 704 593
Accrued abandonment, restoration and environmental liabilities 844 622
Other deferred credits and liabilities 960 902
Minority interests 39 275
Convertible preferred securities of a subsidiary trust 522 522
Stockholders' equity 4,009 3,298
---------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $11,798 $10,846
===================================================================================================
(a) Includes current portion of LTD of: 248 6
-8-
CONSOLIDATED CASH FLOWS (UNAUDITED) UNOCAL CORPORATION
For the Twelve Months
Ended December 31,
--------------------------------
Millions of dollars 2003 2002
-------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net earnings $ 643 $ 331
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation, depletion and amortization 988 973
Asset impairments 93 47
Dry hole costs 128 107
Amortization of exploratory leasehold costs 108 98
Deferred income taxes 56 22
Gain on sales of assets (119) (42)
Gain on disposal of discontinued operations (25) (2)
Pension expense net of contributions 58 22
Restructuring provisions net of payments 27 2
Cumulative effect of accounting changes 83 -
Other (3) (73)
Working capital and other changes related to operations (88) 86
-------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,949 1,571
-------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Capital expenditures (includes dry hole costs) (1,718) (1,670)
Proceeds from sales of assets 642 163
Proceeds from sale of discontinued operations 11 3
-------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,065) (1,504)
-------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Long-term borrowings 205 585
Reduction of long-term debt and capital lease obligations (452) (495)
Minority interests (257) (8)
Proceeds from issuance of common stock 58 21
Dividends paid on common stock (207) (196)
Loans to key employees 11 6
Other (6) (2)
-------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (648) (89)
-------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 236 (22)
-------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 168 190
-------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 404 $ 168
===================================================================================================================
-9-
OPERATING HIGHLIGHTS UNOCAL CORPORATION
Three Months Twelve Months
Ended December 31,
----------------------------------
2003 2002 2003 2002
--------------------------------------------------------------------------------
North America Net Daily Production
Liquids (thousand barrels)
U.S. Lower 48 (a) (b) 37 46 43 52
Alaska 21 23 21 24
Canada 17 18 17 18
--------------------------------------------------------------------------------
Total liquids 75 87 81 94
Natural gas - dry basis (million cubic feet)
U.S. Lower 48 (a) (b) 516 659 616 719
Alaska 50 68 57 76
Canada 89 91 90 91
--------------------------------------------------------------------------------
Total natural gas 655 818 763 886
North America Average Prices (excluding hedging activities) (c)
Liquids (per barrel)
U. S. Lower 48 $27.73 $25.20 $28.07 $22.85
Alaska $30.73 $26.96 $29.85 $24.21
Canada $22.94 $21.84 $24.76 $20.70
Average $27.52 $24.94 $27.84 $22.79
Natural gas (per mcf)
U. S. Lower 48 $ 4.47 $ 3.77 $ 5.18 $ 3.01
Alaska $ 1.46 $ 1.20 $ 1.31 $ 1.42
Canada $ 4.56 $ 3.50 $ 5.07 $ 2.67
Average $ 4.30 $ 3.51 $ 4.88 $ 2.83
--------------------------------------------------------------------------------
North America Average Prices (including hedging activities) (c)
Liquids (per barrel)
U. S. Lower 48 $28.50 $25.19 $27.72 $22.87
Alaska $30.73 $26.96 $29.85 $24.21
Canada $22.94 $21.84 $24.76 $20.70
Average $27.90 $24.94 $27.66 $22.81
Natural gas (per mcf)
U. S. Lower 48 $ 4.91 $ 3.75 $ 5.07 $ 3.07
Alaska $ 1.46 $ 1.20 $ 1.31 $ 1.42
Canada $ 4.34 $ 3.31 $ 4.78 $ 2.66
Average $ 4.61 $ 3.47 $ 4.76 $ 2.88
--------------------------------------------------------------------------------
(a) Includes proportional interests in production of equity investees.
(b) Includes minority interests of :
Liquids - 3 - 7
Natural gas - 41 5 82
Barrels oil equivalent - 10 1 21
(c) Excludes gains/losses on derivative positions not accounted for as hedges
and ineffective portions of hedges.
-10-
OPERATING HIGHLIGHTS (CONTINUED) UNOCAL CORPORATION
Three Months Twelve Months
Ended December 31,
----------------------------------
2003 2002 2003 2002
--------------------------------------------------------------------------------
International Net Daily Production (d)
Liquids (thousand barrels)
Far East 63 53 59 53
Other (a) 19 21 20 20
--------------------------------------------------------------------------------
Total liquids 82 74 79 73
Natural gas - dry basis (million cubic feet)
Far East 844 823 877 847
Other (a) 78 96 88 93
--------------------------------------------------------------------------------
Total natural gas 922 919 965 940
International Average Prices (e)
Liquids (per barrel)
Far East $28.40 $25.36 $27.30 $22.88
Other $29.68 $27.55 $28.29 $25.47
Average $28.73 $26.01 $27.54 $23.57
Natural gas (per mcf)
Far East $ 2.96 $ 2.77 $ 2.83 $ 2.75
Other $ 3.00 $ 2.83 $ 2.90 $ 2.72
Average $ 2.96 $ 2.78 $ 2.84 $ 2.75
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Worldwide Net Daily Production (a) (b) (d)
Liquids (thousand barrels) 157 161 160 167
Natural gas - dry basis (million cubic feet) 1,577 1,737 1,728 1,826
Barrels oil equivalent (thousands) 420 451 448 471
Worldwide Average Prices (excluding hedging activities) (c)
Liquids (per barrel) $28.14 $25.44 $27.70 $23.13
Natural gas (per mcf) $3.51 $3.12 $3.73 $2.79
Worldwide Average Prices (including hedging activities) (c) (e)
Liquids (per barrel) $28.33 $25.44 $27.60 $23.14
Natural gas (per mcf) $3.65 $3.10 $3.66 $2.81
--------------------------------------------------------------------------------
(a) Includes proportional interests in production of equity investees.
(b) Includes minority interests of :
Liquids - 3 - 7
Natural gas - 41 5 82
Barrels oil equivalent - 10 1 21
(c) Excludes gains/losses on derivative positions not accounted for as hedges
and ineffective portions of hedges.
(d) International production is presented utilizing the economic interest
method.
(e) International did not have any hedging activities.
-11-