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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 22, 1996
TEXACO INC.
(Exact name of registrant as specified in its charter)
Delaware 1-27 74-1383447
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification Number)
2000 Westchester Avenue, 10650
White Plains, New York (Zip Code)
(Address of principal executive offices)
(914) 253-4000
(Registrant's telephone number, including area code)
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Item 5. Other Events
1. On July 22, 1996, the Registrant issued an Earnings Press Release
entitled "Texaco Reports Results for the Second Quarter and First Half
1996," a copy of which is attached hereto as Exhibit 99.1 and made a
part hereof.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Press Release issued by Texaco Inc. dated July 22, 1996, entitled
"Texaco Reports Results for the Second Quarter and First
Half 1996."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEXACO INC.
---------------------
(Registrant)
By: R. E. KOCH
---------------------
(Assistant Secretary)
Date: July 22, 1996
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APPENDIX
Description of graphic material included in Exhibit 99.1.
The following information is depicted in graphic form in a Press Release issued
by Texaco Inc. dated July 22, 1996, entitled "Texaco Reports Results for the
Second Quarter and First Half 1996" filed as Exhibit 99.1 to this Form 8-K:
1. The first graph is located within the seventh paragraph of Exhibit
99.1. Graph is entitled "Texaco Average U.S. Natural Gas Price Per
Quarter" and is shown in dollars per MCF by quarter for the year 1995
and first two quarters of 1996. The Y axis depicts dollars per MCF from
$0.00 to $3.00 with $.50 increments. The X axis depicts the calendar
quarters for the year 1995 and first two quarters of 1996. The plot
points are as follows:
First Quarter 1995 - $1.60 per MCF
Second Quarter 1995 - $1.67 per MCF
Third Quarter 1995 - $1.52 per MCF
Fourth Quarter 1995 - $1.81 per MCF
First Quarter 1996 - $2.15 per MCF
Second Quarter 1996 - $2.07 per MCF
The following summary information is also depicted at the bottom of the graph:
First Half 1995 - $1.63 per MCF
First Half 1996 - $2.11 per MCF
2. The second graph is located within the eighth paragraph of Exhibit
99.1. Graph is entitled "Texaco Average U.S. Crude Price Per Quarter"
and is shown in dollars per barrel by quarter for the year 1995 and
first two quarters of 1996. The Y axis depicts dollars per barrel from
$12.00 to $20.00 with $2.00 increments. The X axis depicts the calendar
quarters for the year 1995 and first two quarters of 1996. The plot
points are as follows:
First Quarter 1995 - $14.85 per barrel
Second Quarter 1995 - $15.85 per barrel
Third Quarter 1995 - $14.88 per barrel
Fourth Quarter 1995 - $14.89 per barrel
First Quarter 1996 - $16.51 per barrel
Second Quarter 1996 - $17.30 per barrel
The following summary information is also depicted at the bottom of the graph:
First Half 1995 - $15.35 per barrel
First Half 1996 - $16.90 per barrel
3. The third graph is located within the tenth paragraph of Exhibit 99.1.
Graph is entitled "Texaco Average Int'l. Crude Price Per Quarter"
and is shown in dollars per barrel by quarter for the year 1995 and
first two quarters of 1996. The Y axis depicts dollars per barrel from
$12.00 to $20.00 with $2.00 increments. The X axis depicts the calendar
quarters for the year 1995 and first two quarters of 1996. The plot
points are as follows:
First Quarter 1995 - $16.38 per barrel
Second Quarter 1995 - $17.30 per barrel
Third Quarter 1995 - $15.45 per barrel
Fourth Quarter 1995 - $16.18 per barrel
First Quarter 1996 - $18.02 per barrel
Second Quarter 1996 - $18.41 per barrel
The following summary information is also depicted at the bottom of the graph:
First Half 1995 - $16.83 per barrel
First Half 1996 - $18.21 per barrel
FDeb:bbm
(8KJUL22)
EXHIBIT 99.1
TEXACO REPORTS RESULTs
----------------------
FOR THE SECOND QUARTER AND THE FIRST HALF 1996
----------------------------------------------
FOR IMMEDIATE RELEASE: MONDAY, JULY 22, 1996.
- ----------------------------------------------
WHITE PLAINS, N.Y., July 22 - Texaco announced today that total
worldwide net income for the second quarter of 1996 was $689 million, or $2.59
per share, as compared with $271 million, or $.99 per share, for the second
quarter of 1995. Total net income for the first half of 1996 was $1,075 million,
or $4.01 per share, as compared with $568 million, or $2.07 per share, for the
first half of 1995. Both years included special items.
Excluding special items, second quarter 1996 net income was $465
million, or $1.73 per share. This was $194 million, or 72 percent, above the
second quarter of 1995. First half 1996 net income was $851 million, or $3.15
per share. This was $354 million, or 71 percent, above the same period of 1995.
In commenting on 1996 results, Texaco Inc. Chairman and Chief Executive
Officer Peter I. Bijur, stated: "The earnings for the second quarter represent
the eighth consecutive quarter that earnings exceeded previous years' levels.
Improvements in nearly all sectors of our business were enhanced by strong crude
and natural gas prices during the first half of 1996. Crude oil production
increased both internationally and domestically as a result of new producing
fields, continued field developments and enhanced recovery from existing fields.
We also were able to take greater advantage of higher natural gas prices in the
U.S. because a significant portion of our U.S. gas production moved throughout
our strategically positioned Henry Hub in Louisiana to major North American
markets, where demand has been strong.
"In the downstream, overall profitability improved due to higher
margins, solid operating performance at our refineries and increased branded
sales volumes. However, while refining margins rebounded from last year's
historically low levels, marketing product margins eroded in Europe and in the
U.S. due to competitiveness in the marketplace. As a result, downstream earnings
continued to be below the levels required to provide a reasonable return on
invested capital.
- more -
- 2 -
"Results for all of our worldwide businesses have benefited from our
unrelenting drive to improve productivity and reduce overhead expenses, as our
cash operating expenses per barrel were significantly below the 1993 level, when
our program for growth was launched," Bijur added. "Also, we have increased our
capital expenditures this year, focusing on key upstream opportunities,
especially in the deepwater Gulf of Mexico, where we have been very successful."
Second Quarter First Half
-------------- ----------------
Texaco Inc. (Millions): 1996 1995 1996 1995
- --------------------------------------------------------------------------------
Net income before special
items $ 465 $ 271 $ 851 $ 497
----- ----- ----- -----
Gain on sale of an interest
in an affiliate 224 -- 224 --
Gains on major asset sales
and other -- -- -- 192
Cumulative effect of accounting change
SFAS - 121 -- -- -- (121)
----- ----- ----- -----
224 -- 224 71
----- ----- ----- -----
Total net income $ 689 $ 271 $1,075 $ 568
===== ===== ===== =====
- --------------------------------------------------------------------------------
Details on special items are included in the following analysis of
functional net income.
ANALYSIS OF FUNCTIONAL NET INCOME
OPERATING EARNINGS
PETROLEUM AND NATURAL GAS
EXPLORATION AND PRODUCTION
Second Quarter First Half
-------------- ---------------
United States (Millions): 1996 1995 1996 1995
- --------------------------------------------------------------------------------
Operating earnings before
special items $243 $177 $510 $321
Special items -- -- -- 112
---- ---- ---- ----
Total operating net income $243 $177 $510 $433
- --------------------------------------------------------------------------------
Strong earnings growth in the U.S. upstream operations for both the second
quarter and first half of 1996 resulted from higher production and prices for
both crude oil and natural gas. Natural gas prices averaged 24 percent and 29
percent higher than the second quarter and first half of 1995, respectively.
Higher natural gas prices reflected the impact of prolonged cold weather and
increased industry demand to replenish natural gas storage.
- more -
- 3 -
U. S. crude oil prices for 1996 averaged nine percent and 10 percent higher
than the second quarter and first half of 1995, respectively. Similar to natural
gas prices, increased worldwide crude oil prices reflected the prolonged cold
weather in the U.S. and Western Europe. During this period, the imbalance in
petroleum product supply and demand was exacerbated by production disruptions in
Mexico and the North Sea at a time when crude inventory levels were low.
Production of crude oil and natural gas from new fields in 1996, as well as
continued development and enhanced recovery from existing fields, more than
offset declines from the normal maturation of fields and 1995 asset sales.
Exploratory expenses were higher in 1996 due to increased seismic and other
drilling activity, particularly offshore in the Gulf of Mexico, including
deepwater properties, which reflects the company's aggressive program to expand
production.
Results for 1995 included a first quarter net special gain of $112 million
principally resulting from the sale of non-core producing assets.
Second Quarter First Half
--------------- ----------------
International (Millions): 1996 1995 1996 1995
- --------------------------------------------------------------------------------
Total operating net income $ 103 $ 83 $ 233 $ 166
- --------------------------------------------------------------------------------
Both the second quarter and first half of 1996 results for the
international upstream operations reflected higher crude oil production and
prices. Production from new fields in China
- more
- 4 -
and continuing development programs in the Partitioned Neutral Zone, between
Saudi Arabia and Kuwait, more than offset lower production in the United Kingdom
(U.K.), resulting mainly from maturing fields, and certain maintenance and
repair activities. Exploratory expenses were higher in 1996, principally from
expanded activity.
MANUFACTURING, MARKETING AND DISTRIBUTION
Second Quarter First Half
-------------- -----------------
United States (Millions): 1996 1995 1996 1995
- --------------------------------------------------------------------------------
Total operating net income $ 144 $ 30 $ 148 $ 11
- --------------------------------------------------------------------------------
In the U.S. downstream operations, significant improvement in West Coast
refining margins in the second quarter of 1996 was the principal reason for
improved results for both the second quarter and the first half of 1996 as
compared to the same periods of 1995. First quarter refining margins were
depressed and only slightly better than the historic low levels experienced
early in 1995. These margins improved in the second quarter as product prices
rose, partly recovering the rapidly increasing first quarter crude oil price
increases. Also, product prices rose due to shortages resulting from regional
refining problems and new California gasoline formulation requirements at the
time when the seasonal increase in market demand occurred. Improved refinery
operations and continued focus on cost containment also contributed to the
improved 1996 results.
Throughout the first half of 1996, marketing margins for most refined
products were lower than the comparable period of 1995. This has been offset
partially by the continued strength in gasoline and diesel sales volumes, with
Texaco branded gasoline sales up four percent. Additionally, downstream earnings
benefited from improved profits in the distribution and transportation
businesses, particularly in the second quarter of 1996.
- more -
- 5 -
Second Quarter First Half
-------------- ---------------
International (Millions): 1996 1995 1996 1995
- --------------------------------------------------------------------------------
Operating earnings before
special items $ 80 $ 79 $172 $183
Special items 224 -- 224 80
---- ---- ---- ----
Total operating net income $304 $ 79 $396 $263
- --------------------------------------------------------------------------------
In the international downstream operations, results for the second
quarter benefited from higher marketing margins in Brazil, as well as higher
margins in the Caltex operating markets, primarily Singapore and Australia.
These benefits were offset partially by lower operating margins in Japan
resulting from competitive pressures and by the April 1996 sale by Caltex of its
interest in the Nippon Petroleum Refining Company, Limited (NPRC). In Europe,
higher refining margins were offset partially by lower marketing margins,
particularly in the U.K., reflecting excess supply and a highly competitive
market.
The earnings decline, before special items, for the first half of 1996
reflected lower Caltex earnings in Japan and Korea, offset partially by higher
refining margins in Bahrain and Singapore. The benefits of higher refining
margins in Europe were somewhat offset by lower marketing margins.
Total second quarter results for 1996 included a special gain of $224
million relating to the sale by Caltex of its interest in NPRC less the tax on
the portion of the sale proceeds distributed to the shareholders. Results in
1995 included first quarter net special gains of $80 million, primarily relating
to the sale of land by a Caltex affiliate in Japan.
CORPORATE/NONOPERATING RESULTS
Second Quarter First Half
-------------- ------------------
(Millions): 1996 1995 1996 1995
- --------------------------------------------------------------------------------
Total corporate/nonoperating $ (108) $ (105) $ (217) $ (195)
- --------------------------------------------------------------------------------
Corporate and nonoperating results for 1995 included first quarter gains
of $25 million, principally from sales of equity securities held for investment
by the insurance operations.
- more -
- 6 -
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures, including equity in such
expenditures of affiliates, were $1,437 million for the first half of 1996, as
compared to $1,272 million for the same period of 1995. Expenditures for the
second quarter of 1996 amounted to $796 million versus $759 million for the
second quarter of 1995.
Increased U.S. exploration and production expenditures in the first half
of 1996 reflected the continued focus on key upstream opportunities especially
in the Gulf of Mexico, in both the immediate offshore and deepwater areas. The
investment increase resulted from higher levels of rank wildcat drilling,
continued revitalization of existing fields and an aggressive lease acquisition
program. Texaco's first subsea development, the Shasta Prospect, began producing
natural gas in the first quarter. In the deepwater areas, recent appraisal wells
have confirmed the commerciality of the 1995 Petronius discovery and production
testing at the Gemini Prospect confirmed that the reservoirs are capable of
producing at commercial rates. Significant deepwater acreage acquired at the
recent federal lease sale provides Texaco with the third-largest inventory of
deepwater Gulf of Mexico acreage holdings in the industry. Also, planning has
begun to construct a major natural gas gathering and transmission pipeline and
processing complex to be located onshore and offshore South Louisiana.
Internationally, upstream investment for the first half of 1996 exceeded
the aggressive activity level of 1995. Increased expenditures focused on Latin
America, West Africa, the Partitioned Neutral Zone and Denmark while development
work continued on the Captain Field in the U.K. North Sea and in Indonesia.
Expenditures in downstream operations decreased due to the completion of
refinery upgrades in the U.S. and Panama, and the completion of refining
construction projects in Thailand and Singapore by Caltex, which were offset
partially by selected marketing investments, particularly in Latin American
growth markets.
-xxx-
NOTE TO EDITORS: Tables for the second quarter and first half are attached.
CONTACTS: Jim Swords (914) 253-4156
Cynthia Michener (914) 253-4743
Yorick Fonseca (914) 253-7034
Rachel Speltz (914) 253-4175
Additional Texaco information is available on the World Wide Web at:
http://www.texaco.com
- 7 -
Second Quarter First Half
------------------ -----------------
1996 1995(a) 1996 1995 (a)
---- ---- ---- ----
FUNCTIONAL NET INCOME ($000,000)
- --------------------------------
Operating Earnings (Losses)
Petroleum and natural
gas Exploration and
production
United States $ 243 $ 177 $ 510 $ 433(b)
International 103 83 233 166
------- ------- ------- -------
Total 346 260 743 599
------- ------- ------- -------
Manufacturing, marketing and
distribution
United States 144 30 148 11
International 304(b) 79 396(b) 263(b)
------- ------- ------- -------
Total 448 109 544 274
------- ------- ------- -------
Total petroleum
and natural gas 794 369 1,287 873
Nonpetroleum 3 7 5 11
------- ------- ------- -------
Total operating
earnings 797 376 1,292 884
Corporate/Nonoperating (108) (105) (217) (195)
------- ------- ------- -------
Net income before
accounting change (c) 689 271 1,075 689
Cumulative effect of
adoption of SFAS 121 -- -- -- (121)
------- ------- ------- -------
Total net income $ 689 $ 271 $ 1,075 $ 568
======= ======= ======= =======
EARNINGS (LOSS) PER COMMON SHARE (dollars)
- ------------------------------------------
Net income before
cumulative effect of
accounting change $ 2.59 $ .99 $ 4.01 $ 2.54
Cumulative effect of
accounting chang -- -- -- (.47)
------- ------- ------- -------
Total net income $ 2.59 $ .99 $ 4.01 $ 2.07
======= ======= ======= =======
Average number of common
shares outstanding for
computation of earnings
per share (000,000) 260.8 259.9 260.7 259.7
(a) Results for 1995 have been reclassified and restated for the adoption of
SFAS 121.
(b) Includes special items as detailed in news release.
(c) Includes provision for income taxes
($000,000) $ 342 $ 176 $ 620 $ 392
- 8 -
Second Quarter First Half
-------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
OTHER FINANCIAL
DATA ($000,000)
Revenues $11,261 $ 9,259 $21,532 $18,326
Total assets as
of June 30 (d)$25,100 $25,167
Stockholders' equity
as of June 30 (d)$10,026 $10,048
Total debt as of June 30 (d)$ 5,500 $ 6,192
Capital and exploratory
expenditures (includes
equity in affiliates)
Exploration and production
United States $ 355 $ 215 $ 621 $ 387
International 243 295 450 438
------- ------- ------- -------
Total 598 510 1,071 825
------- ------- ------- -------
Manufacturing, marketing
and distribution
United States 79 93 156 167
International 114 149 201 268
------- ------- ------- -------
Total 193 242 357 435
------- ------- ------- -------
Other 5 7 9 12
------- ------- ------- -------
Total $ 796 $ 759 $ 1,437 $ 1,272
======= ======= ======= =======
Texaco Inc. and subsidiary
companies Exploratory expenses
included above:
United States $ 44 $ 15 $ 67 $ 33
International 46 44 92 81
------- ------- ------- -------
Total $ 90 $ 59 $ 159 $ 114
======= ======= ======= =======
Dividends paid to common
stockholders $ 208 $ 208 $ 416 $ 416
Dividends per common
share (dollars) $ .80 $ .80 $ 1.60 $ 1.60
Dividend requirements
for preferred stockholders $ 14 $ 15 $ 29 $ 31
d) Preliminary.
- 9 -
Second Quarter First Half
-------------- ---------------
1996 1995 1996 1995
---- ---- ---- ----
OPERATING DATA -
INCLUDING INTERESTS
IN AFFILIATES
Net production of
crude oil and natural
gas liquids (000 BPD)
United States 391 382 387 385
Other Western Hemisphere 11 17 11 17
Europe 110 98 115 116
Other Eastern Hemisphere 268 236 263 237
----- ----- ----- -----
Total 780 733 776 755
Net production of
natural gas -
available for
sale (000 MCFPD)
United States 1,685 1,604 1,666 1,632
Europe 180 200 192 229
Other International 177 174 173 174
----- ----- ----- -----
Total 2,042 1,978 2,031 2,035
Natural gas sales
(000 MCFPD)
United States 3,007 3,166 3,120 3,221
Europe 255 240 276 267
Other International 187 183 183 184
----- ----- ----- -----
Total 3,449 3,589 3,579 3,672
Natural gas liquids sales
(including purchased LPGs)
(000 BPD)
United States 188 199 216 218
International 95 61 106 75
----- ----- ----- -----
Total 283 260 322 293
Refinery input (000 BPD)
United States 721 686 716 685
Other Western Hemisphere 64 41 60 32
Europe 340 226 337 270
Other Eastern Hemisphere 268 409 385 437
----- ----- ----- -----
Total 1,393 1,362 1,498 1,424
Refined product sales
(000 BPD)
United States 1,034 904 1,027 896
Other Western Hemisphere 381 342 379 345
Europe 453 424 464 436
Other Eastern Hemisphere 627 731 712 756
----- ----- ----- -----
Total 2,495 2,401 2,582 2,433
