Unocal’s Results Exceed Forecasts
Higher crude oil and natural gas prices boosted profit at Unocal Corp. by 55% in the second quarter, beating analyst estimates and offsetting a dip in production.
The El Segundo-based company on Tuesday announced net income of $177 million, or 68 cents a share, for the quarter ended June 30. That’s up from earnings of $114 million, or 46 cents a share, in the same period last year. Revenue rose 18%, to $1.62 billion.
“It’s modestly higher than expectations. They are, like everybody [in the industry], benefiting from strong domestic gas prices and strong international oil prices,” said Bryan Caviness, a Fitch Ratings director who follows the oil and gas industries. “For a company like this, it’s pretty straightforward.”
Unocal, which has no refineries or retail operations, focuses primarily on finding and extracting oil and natural gas from sites in North America and Asia, then selling the commodities on global markets.
The company’s net worldwide production for the quarter was the equivalent of 463,000 barrels of oil a day, down nearly 5% from the year-ago period because of declines in North America. Unocal reduced domestic drilling in the quarter and sold its stakes in 75 producing fields in the Gulf of Mexico.
Unocal sold the properties to help streamline its continental U.S. operations and help lower its debt. In other recent action, the company sold its interest in an Indonesian geothermal project, and spent $252 million to buy out its partner in Spirit Energy 76 Development, which owns stakes in oil and gas producing properties in the U.S. Gulf of Mexico region.
Special items in the second quarter included $30 million in gains from certain stock sales, trading derivatives and discontinued operations, as well as $44 million in charges for restructuring U.S. operations and environmental and litigation provisions, Unocal said.
Excluding the special items and discontinued operations, Unocal’s operating income totaled $191 million, or 73 cents a share, in the second quarter. Wall Street analysts’ consensus estimate for operating earnings was 69 cents a share, according to Thomson First Call.
Unocal said it expected third-quarter earnings of 65 cents to 75 cents a share, adjusted to exclude special items, discontinued operations and the cumulative effects of accounting changes. It forecast full-year adjusted earnings of $2.90 to $3.20 a share, depending on commodity prices.
Unocal’s earnings announcement came after trading closed Tuesday on the New York Stock Exchange, where the company’s shares fell 71 cents to $29.18. Also on Tuesday, Unocal announced its regular quarterly dividend of 20 cents a share, payable Nov. 10 to shareholders of record on Oct. 10.
