Unocal Provides Update on Earnings, Production, Operating Activities
June 30 2005 - 6:00PM
PR Newswire (US)
Unocal Provides Update on Earnings, Production, Operating
Activities EL SEGUNDO, Calif., June 30 /PRNewswire-FirstCall/ --
Unocal Corporation (NYSE:UCL) today provided an earnings and
production outlook as well as an update on certain operational
activities. Earnings outlook The company said it expects second
quarter 2005 adjusted after-tax earnings (excluding special items
described below) of $1.65 to $1.70 per share. This compares with
the Thomson/First Call mean of analyst estimates (published June
27, 2005) of $1.36 per share. Unocal's second quarter forecast
assumes average NYMEX benchmark prices of $52.25 per barrel of
crude oil and $6.88 per million British thermal units (mmBtu) for
North America natural gas for the period. Second quarter special
items are expected to include a $12 million after-tax gain from the
sale of Unocal's 76 Seadrift LLC subsidiary and may include other
special items that have not yet been determined. The second quarter
adjusted after-tax earnings forecast exclude special items. Because
of the inherent uncertainty related to determining whether or when
these items will occur and quantifying their dollar impact, Unocal
does not believe it is able to provide a meaningful forecast of
second-quarter net earnings, and, therefore, is unable to provide a
quantitative reconciliation to any forecasted GAAP net earnings.
Unocal expects to announce second quarter 2005 earnings on Aug. 1,
2005. Production outlook Unocal said its 2Q 2005 net production is
expected to average approximately 455,000 barrels-of-oil equivalent
(BOE) per day. For the full-year 2005, Unocal expects net
production to average approximately 440,000 BOE per day, up 2
percent from the previous forecast. Operating highlights Unocal
also provided an update on two exploration wells in the Gulf of
Mexico and a recent farm-in in the Black Sea. Unocal is currently
drilling the Knotty Head well, located in Green Canyon block 512.
The well has encountered more than 300 feet of apparent hydrocarbon
pay in a secondary objective based on measured-while-drilling logs.
The well is currently at 29,670 feet and has yet to penetrate the
primary objective in the Lower Miocene section. The well is planned
for a total depth of 32,500 feet. Unocal has a 25 percent working
interest in Knotty Head. Co-owners include Nexen Petroleum Offshore
U.S.A. Inc., a wholly owned subsidiary of Nexen Inc.
(NYSE:andNYSE:TSX:NYSE:NXYNYSE:25%), BHP Billiton (25%) and
Anadarko Petroleum Corporation (NYSE:APCNYSE:25%). Nexen Petroleum
Offshore U.S.A. Inc. is the operator. The Chilkoot well, located in
Green Canyon block 320, has been considered non-commercial based on
results to date. Unocal expects to record a $6 million pretax
charge in connection with the well in 2Q 2005. The well was drilled
to 32,023 feet measured depth. Unocal has a 23.34 percent working
interest. Co-venturers include Kerr-McGee Oil & Gas Corporation
(NYSE:KMGNYSE:33.33%), who is the operator, Devon Louisiana
Corporation (NYSE:DVNNYSE:20.00%), Plains Exploration &
Production Company (NYSE:PXPNYSE:13.33%) and Dominion Exploration
& Production, Inc. (NYSE:DNYSE:10.00%). A Unocal subsidiary has
also entered into a farm-in agreement for acreage held by BP in the
Turkey and Georgia sections of the Eastern Black Sea. Subject to
government approvals, Unocal will acquire a 25-percent working
interest in Turkish block 3534 and a 10-percent working interest in
Georgia blocks APC-IIA, IIB and III. The prospects are in deep
water (2,100 to 5, 500 feet). BP plans to spud an exploration well
on one of the prospects in Turkey in the third quarter 2005. Unocal
expects its share of capital expenditures for the Black Sea venture
to be approximately $50 million in 2005. About Unocal Corporation
Unocal is one of the world's leading independent natural gas and
crude oil exploration and production companies. The company's
principal oil and gas activities are in Asia and North America.
Forward-Looking Statements This news release contains
forward-looking statements about matters such as estimated adjusted
after-tax earnings, drilling, development and other plans for
future operations, charges to earnings, and production rates and
timing. Although these statements are based upon Unocal's current
expectations and beliefs, they are subject to known and unknown
risks and uncertainties that could cause actual results and
outcomes to differ materially from those described in, or implied
by, the forward-looking statements, including Unocal's pending
merger with Chevron; volatility in commodity prices; Unocal's
ability to find or acquire commercially productive reservoirs and
to develop and produce deepwater and other projects in a timely and
cost-effective manner; the accuracy of Unocal's estimates and
judgments regarding hydrocarbon resources and formations and
reservoir performance; operational risks inherent in the
exploration, development and production of oil and gas; the impact
of environmental laws, permitting and licensing requirements and
other regulations; international and domestic political and
economic factors; and other factors discussed in Unocal's 2004
Annual Report on Form 10-K and subsequent reports filed or
furnished by Unocal with the U.S. Securities and Exchange
Commission (SEC). Copies of Unocal's SEC filings are available from
Unocal by calling 800-252-2233 or from the SEC by calling
800-SEC-0330. The reports are also available on the Unocal web
site, http://www.unocal.com/. Unocal undertakes no obligation to
update the forward-looking statements in this news release to
reflect future events or circumstances. All such statements are
expressly qualified by this cautionary statement, which is provided
pursuant to the safe harbor provisions of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Supplemental Non-GAAP Financial Measure The news
release includes a "non-GAAP financial measure" as defined under
SEC regulations. Adjusted after-tax earnings are defined as net
earnings excluding special items and cumulative effects of
accounting changes. Special items represent certain significant
matters which positively or negatively impact net earnings and that
management determines to be not representative of the company's
ongoing operations. Examples include: gain/loss from major asset
sales; environmental remediation costs related primarily to
inactive, closed or previously owned company facilities and third
party sites; costs or settlements associated with major
restructuring plans; litigation settlement costs primarily
associated with former company operations or closed/inactive
facilities; significant impairments due to changes in commodity
prices; material damage to company facilities or operations due to
fire, explosion, earthquakes, storms or other "acts of god" not
covered by insurance; certain costs associated with major
acquisitions including litigation and significant trading
derivatives; and insurance recoveries associated with former
company operations or for costs incurred in prior years. Unocal's
management believes that adjusted after-tax earnings is a useful
supplemental financial measure to investors and analysts because it
facilitates a focus on the company's ongoing operations and allows
for convenient comparisons to the company's prior reporting
periods. Adjusted after-tax earnings is also used as a factor in
calculating various performance measures in connection with
payments under the company's annual bonus plan, and it is used by
management as a factor in reviewing business unit performance.
Adjusted after-tax earnings are not a substitute for net earnings
determined in accordance with GAAP as a measure of profitability or
other GAAP financial measures. Special items excluded from this
non-GAAP measure do in fact positively or negatively impact net
earnings. Other companies may define special items differently, and
the Thomson/First Call mean of analyst estimates may not use a
similar definition. Hence, these measures may not be comparable
with similarly titled amounts reported by other companies or
analyst estimates reported by Thomson/First Call. DATASOURCE:
Unocal Corporation CONTACT: News Media, Barry Lane,
+1-310-726-7731, or Investors, Robert Wright, +1-310-726-7665, both
of Unocal Corporation Web site: http://www.unocal.com/
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