General Interest Unocal sees improved profits, cuts spending

Unocal Corp. expects to see higher earnings this year on the strength of improved operating results from refining/marketing and Thailand natural gas production.

At the same time, the company plans to cut capital spending this year by almost 11%. In addition, Unocal is considering selling its Dutch North Sea assets.

Unocal Chairman and Chief Executive Officer Roger Beach outlined his company's 1996 plans to security analysts last week at El Segundo, Calif.

Downstream turnaround

Beach said Unocal's downstream earnings performance began to turn around in fourth quarter 1995, and the company expects this improvement to gain momentum in 1996.

"We've already met and exceeded our 1996 target for increased light product output from our refineries," he said.

In retail marketing, the company foresees improved margins on the California specification reformulated gasoline that will go on sale this spring.

Beach said, "In addition, increased gasoline throughput and returns from our reformatted service stations are meeting or exceeding our forecasts."

Non-U.S. upstream

Unocal expects a 14% increase in non-U.S. natural gas production in 1996. That's due mainly to a significant boost in the company's Gulf of Thailand production in the second quarter, when the Petroleum Authority of Thailand's new pipeline comes on stream.

"We'll also see oil and gas production continue to improve in Indonesia, the result of a highly successful exploration and development program that has revitalized operations there," Beach said.

Worldwide, Unocal's 1996 gas production is estimated at 1.8 bcfd, up slightly from 1995. Crude oil and condensate production is 212,000 b/d, down from 240,000 b/d last year.

Spending, asset sale

Unocal revised its capital spending for 1996, calling for outlays of $1.3 billion compared with $1.46 billion in 1995. The spending forecast focuses on non-U.S. exploration and production and geothermal and power projects.

"We are in the process of retaining an adviser to assist us in disposal of our oil and gas interests in the Netherlands North Sea as we continue to shift our strategic focus to Southeast Asia and other areas that offer greater opportunities for growth," Beach said.

Unocal Netherlands BV operations include oil production and related facilities on Q/1 block containing Helm, Helder, Hoorn, and Haven fields and P/9 block containing Horizon field, as well as gas production and related facilities on L11/B and Q/1-Q/2 blocks containing Halfweg field. Unocal's Netherlands net production in 1995 was 11,000 b/d of crude oil and condensate and 9 MMcfd of gas.