Unocal Provides Update on Earnings, Production, Operating Activities
Unocal has provided an earnings and production outlook as well as an update on certain operational activities.
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.
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.
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: and TSX: NXY, 25%), BHP Billiton (25%) and Anadarko Petroleum Corporation (NYSE: APC, 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: KMG, 33.33%), who is the operator, Devon Louisiana Corporation (NYSE: DVN, 20.00%), Plains Exploration & Production Company (NYSE: PXP, 13.33%) and Dominion Exploration & Production, Inc. (NYSE: D, 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.
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