Unocal Posts Strong Results on High Commodity Prices, Overseas Production
Riding the wave of higher prices and increased overseas production, Unocal Corp. Tuesday reported 2003 unaudited net earnings of $643 million, or $2.46 per share, nearly doubling the $331 million, or $1.34 per share recorded for 2002. The company also logged a 79% increase in 4Q2003 results, posting preliminary net earnings of $180 million, or 68 cents per share.
On the year, the El Segundo, CA-based company noted that preliminary adjusted after-tax earnings for 2003 were $777 million, or $2.95 per share, compared with $426 million, or $1.72 per share for the full-year 2002. Unocal's preliminary adjusted after-tax earnings for 4Q2003 were $167 million, or 63 cents per share, beating Thomson/First Call's median of analyst estimates by a penny.
"We had an outstanding year from a financial and operating standpoint," said Unocal CEO Charles R. Williamson. "We continued to reap the benefits of strong commodity prices and increased our overseas liquids and gas production levels. We expect further growth in international production under new or amended sales contracts that were negotiated during the year."
The company noted that while gas and liquids production increased overseas, in North America production went in the opposite direction. Unocal's total North American natural gas production fell from 818 MMcf/d in 4Q2002 to 655 MMcf/d for 4Q2003. For the year, North American gas production fell from 886 MMcf/d in 2002 to 763 MMcf/d in 2003.
Total North American liquids production dropped from 87,000 b/d in 4Q2002 to 75,000 b/d in 4Q2003, while North American liquids on the year dropped from 94,000 b/d in 2002 to 81,000 b/d in 2003.
On the flip side, total international natural gas production climbed from 919 MMcf/d in 4Q2002 to 922 MMcf/d for 4Q2003. On the year, Unocal's international gas production jumped from 940 MMcf/d in 2002 to 965 MMcf/d for 2003. International liquids showed a similar trend, jumping 8,000 b/d from 4Q2002 to 4Q2003 and 6,000 b/d from full-year 2002 to 2003.
Combined, Unocal posted an average worldwide hydrocarbon liquids and natural gas production figure for the fourth quarter 2003 of 420,000 boe/d, compared with 451,000 boe/d in the same period a year ago.
"The production decline reflected lower North America results primarily because of asset sales in the Lower 48 operations," the company said. "The lower North America production was partially offset by increases in international liquids and natural gas production."
Unocal expects adjusted after-tax earnings of 70 to 80 cents per share in the first quarter of 2004 compared to analyst estimates of 73 cents per share. The company said its forecast assumed average Nymex benchmark prices of $34.25 per barrel of crude oil and $6.00/MMBtu for North America natural gas for the period. The company's current estimate for first quarter 2004 production is between 410,000 and 420,000 boe/d. Unocal's current estimate for the full-year 2004 production is about 450,000 boe/d.
During the new year, Unocal said "major" new developments will near completion, contributing to significant international growth by 2005 (AIOC, Bangladesh, Thailand oil). The company also expects continued deepwater exploration success and appraisal of 2003 deepwater discoveries (St. Malo, Puma, Gehem) and progress on commercialization of Perdido resources (Trident). It also intends to launch Indonesia deepwater gas developments for the Bontang liquefied natural gas plant. Unocal added that it expects to meet $8/boe finding and development cost targets for all of North America, including the reduced Gulf of Mexico shelf program.