Unocal production down in North America, up overseas

Petroleum News Houston staff

Unocal said its 2003 second-quarter profit rose 55 percent from a year ago largely because of higher commodity prices and increased international production. But the exploration and production independent got no help from North America.

Unocal’s daily North American natural gas production for the second quarter fell to 805,000 million cubic feet from 935,000 million cubic feet a year earlier, the company reported July 30. Unocal said its liquids production fell to 84,000 barrels per day from 96,000 barrels per day. Unocal attributed its performance to natural declines, decreased drilling activity and asset sales.

In contrast, Unocal’s daily international gas production increased to 1 billion cubic feet in the 2003 second quarter from 962,000 million cubic feet in the year-ago quarter. Daily liquids production rose to 79,000 barrels from 74,000 barrels.

To help position the company for additional international investment, Unocal said it planned to cut another $500 million in company debt by the end of this year. The company reduced its debt by $150 million during the first half of the year.

“We have significant investments overseas over the next three to four years, and those investments are so important that we want to ensure a strong balance sheet,” Terry Dallas, Unocal’s chief financial officer, said in a conference call.

By the end of 2003, Unocal’s debt should be about $2.9 billion or about 40 percent of market capitalization, compared to a 2002 year-end debt of $3.5 billion or 47 percent of capitalization, the company said.

The actual amount of debt Unocal cuts from its balance sheet will depend on commodity prices and the sale of assets in the Gulf of Mexico and other areas, the company said.

Unocal, even with a slight decline in over production from a year earlier, reported 2003 second-quarter earnings of $177 million or 68 cents per share, compared to $134 million or 52 cents per share in the first quarter and $114 million or 46 cents per share in 2002 second quarter.