Unocal Profit Is Hit Hard by Plunge in Natural Gas Prices

As Unocal Corp. executives had warned in June, the oil company’s second-quarter 1991 earnings, reported Monday, fell precipitously from the same period in 1990--to $5 million from $165 million a year ago.

Analysts viewed the drop as significant, even though the bulk of the 1990 quarterly gain--$132 million--came from a one-time sale of Unocal’s oil and natural gas assets in Norway.

Unocal Chairman Richard J. Stegemeier termed the results “disappointing,” blaming the figures on higher exploration costs, stiff marketing and refining competition on the West Coast and the depressed market for natural gas.

Earnings for petroleum exploration and production in the 1991 second quarter were $77 million, compared to $203 million the previous year.

The collapse in natural gas prices also hit Unocal harder than many other oil companies. Fully 52% of Unocal’s total production and 60% of its reserves are natural gas.

“They have been hurt there quite a bit,” said Charles R. Bureker, an investment counselor and oil analyst based in Walnut Creek, Calif. Bureker also cited “hellish marketing competition” for Unocal from West Coast competitors.

Other observers placed the fault closer to Los Angeles headquarters. “Unocal was once again affected by their refining and marketing operations . . . which have been traditionally weak,” said Michael C. Young, an oil analyst with Smith Barney, Harris Upham & Co. in New York.