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 27, 2000
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)
Item 5. Other Events
- ---------------------
On July 27, 2000, the Registrant issued an Earnings Press Release entitled
"Texaco Reports Second Quarter 2000 Results," 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 27, 2000
entitled "Texaco Reports Second Quarter 2000 Results."
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: /s/ MICHAEL H. RUDY
----------------------
(Secretary)
Date: July 27, 2000
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TEXACO REPORTS SECOND QUARTER 2000 RESULTS
------------------------------------------
FOR IMMEDIATE RELEASE: THURSDAY, JULY 27, 2000.
- ----------------------------------------------
WHITE PLAINS, N.Y., July 27 - Texaco reported today second quarter 2000
income before special items of $641 million ($1.17 per share). Net income for
the period was $625 million ($1.14 per share).
EARNINGS SUMMARY
Second Quarter Six Months
------------- ------------------
2000 1999 2000 1999
- ----------------------------------------------------------------------
Income before special
items (millions) $ 641 $ 286 $1,243 $ 391
Per share $ 1.17 $ 0.52 $ 2.27 $ 0.70
Net income (millions) $ 625 $ 273 $1,199 $ 472
Per share $ 1.14 $ 0.50 $ 2.19 $ 0.85
- ----------------------------------------------------------------------
Texaco Chairman and Chief Executive Officer Peter I. Bijur
commented, "Our strong earnings performance during the quarter was
driven by high crude oil prices and increased U.S. natural gas prices.
Strong worldwide demand and low industry inventories kept both crude
oil and U.S. natural gas prices well above last year's levels.
"Our upstream operations contributed the greatest share of our
earnings improvement during this period. During the quarter, the
divestiture of several non-core producing assets added over $200
million to our cash flow. We continue to be encouraged by the results
of our exploration program as well as the progress on our major
development activities. In addition, the Petronius field offshore in
the Gulf of Mexico began producing on July 9 and our production there
should grow to 20,000 barrels per day in October.
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"In the downstream, our overall results improved versus this
year's first quarter but were below last year. While our refining
results have improved in Europe and on the Gulf and East Coasts of the
United States, the combination of high crude oil costs and the
extremely competitive environment contributed to weak marketing
margins in most areas. Margins in the Caltex region have been
especially weak and, accordingly, our performance there has been
disappointing. During the quarter, the sale of Equilon's Wood River
refinery was completed, furthering our long term strategy of reducing
our refining exposure."
Commenting on Texaco's capital spending, Bijur stated,
"Notwithstanding our strong earnings and cash flow, we continue to
maintain a disciplined approach to our capital spending throughout the
company."
Second Quarter Six Months
-------------- ----------------
Texaco Inc. (Millions
of dollars): 2000 1999 2000 1999
- ----------------------------------------------------------------------
Income before special
items $ 641 $ 286 $1,243 $ 391
----- ----- ------ -----
Gains (losses) on
major asset sales 2 (55) (65) (55)
Tax issues - 54 46 65
Inventory valuation
adjustments - 55 - 138
Employee benefits
revision - - 18 -
Litigation issue (4) - (17) -
Reorganization,
restructuring and
employee separation
costs - (67) (12) (67)
Net loss on Erskine
pipeline (14) - (14) -
----- ----- ------ -----
Special items (16) (13) (44) 81
----- ----- ------ -----
Net income $ 625 $ 273 $1,199 $ 472
===== ===== ====== =====
Details on special items are included in the following segment information.
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OPERATING RESULTS
EXPLORATION AND PRODUCTION
Second Quarter Six Months
-------------- ----------------
United States (Millions
of dollars): 2000 1999 2000 1999
- ----------------------------------------------------------------------
Operating income
before special items $ 393 $ 138 $ 754 $ 165
Special items (40) 10 (107) 21
----- ----- ----- -----
Total operating income $ 353 $ 148 $ 647 $ 186
===== ===== ===== =====
U.S. Exploration and Production earnings for the second quarter
and first six months of 2000 were considerably better than last year
due to higher crude oil and natural gas prices. Tight oil supplies
caused second quarter WTI crude oil prices to average nearly $29.00
per barrel. Texaco's realized crude oil prices for the second quarter
and first six months of 2000 were $24.90 and $24.67 per barrel, 95
percent and 125 percent higher than last year. Increased demand and
low storage levels caused U.S. natural gas prices to rise. For the
second quarter and first six months of 2000, average natural gas
prices were $3.28 and $2.86 per MCF, 60 percent and 49 percent above
last year.
Daily production decreased nine percent for the second quarter and
eight percent for the first six months of the year. This expected
reduction was due to sales of non-core producing properties and
natural field declines. During the second quarter, we received $67
million from these sales bringing our total cash proceeds for the year
to $330 million.
Operating expenses increased eight percent for the second quarter
and six months as higher crude oil and natural gas prices led to
higher utilities expenses and production taxes. Exploratory expenses
for the second quarter and first six months of 2000 were $22 million
and $41 million before tax, $16 million and $51 million below last
year, reflecting reduced activities in the U.S.
Results for the first six months of 2000 included special charges
of $107 million, including $40 million in the second quarter, for net
losses on sales of non-core producing assets. Results for the second
quarter of 1999 included a special gain of $21 million for the sale of
our interest in several California fields and a special charge of $11
million for employee separation costs. Results for 1999 also included
a first quarter special benefit of $11 million for a production tax
refund.
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Second Quarter Six Months
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International (Millions
of dollars): 2000 1999 2000 1999
- ----------------------------------------------------------------------
Operating income
before special items $ 195 $ 80 $ 488 $ 62
Special items 66 (2) 66 (2)
----- ------ ----- ------
Total operating income $ 261 $ 78 $ 554 $ 60
===== ====== ===== ======
International Exploration and Production earnings for the second
quarter and first six months of 2000 were significantly higher than
last year due to higher crude oil prices and lower expenses. Market
conditions have kept crude oil prices strong throughout the first six
months. Our realized crude oil prices for the second quarter and first
six months of 2000 were $23.64 and $23.47 per barrel, 72 percent and
102 percent higher than last year. Average natural gas prices were
$1.44 for the second quarter and $1.46 for the first six months of
2000, 17 percent and seven percent above last year.
Daily production decreased 10 percent for the second quarter and
five percent for the first six months due to scheduled maintenance and
repairs in our U.K. North Sea operations, lower lifting entitlements
for cost recovery in Indonesia as a result of higher crude oil prices
and the sale of non-core producing properties. Production continues to
increase in the Partitioned Neutral Zone and the Karachaganak field in
the Republic of Kazakhstan. During the second quarter, we received
proceeds of $137 million from the sales of non-core producing
properties.
In line with lower production, operating expenses decreased eight
percent for the second quarter and seven percent for the first six
months of 2000. Exploratory expenses for the second quarter were $38
million before tax, slightly lower than last year. Exploratory
expenses for the first six months were $72 million before tax, $46
million lower than last year which included an unsuccessful
exploratory well in a new offshore area of Trinidad.
Results for the second quarter of 2000 included a special benefit
of $80 million for net gains on the sale of non-core producing
properties and a special charge of $14 million for net losses
resulting from the Erskine pipeline interruption in the U.K. North
Sea. Results for the second quarter of 1999 included a special charge
of $2 million for employee separation costs.
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REFINING, MARKETING AND DISTRIBUTION
Second Quarter Six Months
-------------- ---------------
- ------------------------
United States (Millions
of dollars): 2000 1999 2000 1999
- ----------------------------------------------------------------------
Operating income before
special items $ 80 $ 111 $ 93 $ 165
Special items (35) (87) (30) (79)
----- ----- ----- -----
Total operating income $ 45 $ 24 $ 63 $ 86
===== ===== ===== =====
U.S. Refining, Marketing and Distribution earnings before special
items were lower than last year for both the second quarter and first
six months. U.S. downstream activities are primarily conducted through
Equilon Enterprises LLC, Texaco's western alliance with Shell Oil
Company, and Motiva Enterprises LLC, Texaco's eastern alliance with
Shell Oil Company and Saudi Refining, Inc.
During the second quarter and first six months of 2000, Equilon's
earnings declined due to weak marketing and lubricant margins.
Maintenance activity at the Puget Sound, Martinez and Wood River
refineries adversely impacted results for both years. Marketing
margins were depressed because pump prices lagged increases in supply
costs in a very competitive market.
Motiva's results for the second quarter and first six months of
2000 benefited from improved East and Gulf Coast refining margins.
Maintenance activities this year in both quarters at the Delaware City
Refinery and in the second quarter at the Port Arthur Refinery
adversely impacted results. Lower gasoline and distillate inventory
levels and tight supplies due to industry refinery downtime helped
refining margins. While refining results improved, marketing margins
were negatively impacted by higher supply costs which were not fully
recovered in the competitive market.
Results for the first six months of 2000 included a second quarter
special charge of $31 million for the loss on the sale of the Wood
River refinery, a charge for a patent litigation issue of $17 million,
$4 million in the second quarter, and a first quarter gain of $18
million for an employee benefits revision. Results for the first six
months of 1999 included second quarter special charges for losses on
refinery asset sales of $76 million and employee separation costs of
$11 million and a first quarter special benefit of $8 million for
inventory valuation adjustments.
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Second Quarter Six Months
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International (Millions
of dollars): 2000 1999 2000 1999
- ----------------------------------------------------------------------
Operating income before
special items $ 90 $ 76 $ 153 $ 221
Special items - 75 (12) 150
----- ------ ----- ------
Total operating income $ 90 $ 151 $ 141 $ 371
===== ====== ===== ======
International Refining and Marketing earnings before special items
for the second quarter of 2000 increased from last year. Refining
results improved dramatically in Europe as margins improved in the
U.K. and the Netherlands. However, marketing results declined due to
increased costs and highly competitive market conditions in our
European and Latin American areas of operation. Refining results in
Latin America were nearly level with the second quarter 1999.
Operating results for our Caltex affiliate decreased due to lower
marketing margins in the Asia Pacific area.
Results for the first six months of 2000 declined due to weak
marketing margins in the Caltex region, Latin America and Europe.
Refining results were mixed as European and Asian margins improved,
while increased crude costs negatively impacted refining margins in
Panama.
Results for 2000 included first quarter special charges of $12
million for employee separation costs. The second quarter of 1999
included a special gain of $54 million for a Korean tax benefit,
Caltex restructuring charges of $25 million and employee separation
costs in Europe and Latin America of $9 million. Results for 1999 also
included a special benefit for inventory valuation adjustments of $130
million, $55 million in the second quarter.
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GLOBAL GAS AND POWER
Second Quarter Six Months
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(Millions of dollars): 2000 1999 2000 1999
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Operating income before
special items $ - $ 4 $ 20 $ 10
Special items - (3) - (3)
----- ----- ------ ------
Total operating income $ - $ 1 $ 20 $ 7
===== ===== ====== ======
Operating results for the first six months of 2000 benefited from
the first quarter recovery of natural gas liquids prices which was not
sustained in the second quarter. Results for 1999 included gains from
several asset sales, including a gas gathering pipeline in the U.S.
and our 50 percent interest in a U.K. retail gas marketing venture.
Results for the second quarter of 1999 included a special charge
of $3 million for employee separation costs.
CORPORATE/NON-OPERATING RESULTS
Second Quarter Six Months
-------------- ---------------
(Millions of dollars): 2000 1999 2000 1999
- ----------------------------------------------------------------------
Results before special
items $ (115) $ (122) $ (263) $ (230)
Special items (7) (6) 39 (6)
------ ------ ------ ------
Total
corporate/non-operating $ (122) $ (128) $ (224) $ (236)
====== ====== ====== ======
Corporate and non-operating expenses before special items for the
second quarter benefited from a favorable prior period tax revision
and lower interest expense. The first six months of 2000 included
expenses for our Olympic sponsorship program and higher other
corporate expenses. Results for the first six months of 1999 benefited
from a $21 million gain on the sale of marketable securities.
Results for the first six months of 2000 included a first quarter
special benefit of $46 million for favorable income tax settlements
and a second quarter special charge of $7 million for early
extinguishment of debt associated with the anticipated sale of an
offshore producing facility in the U.K. North Sea. Results for 1999
included a second quarter special charge of $6 million for employee
separation costs.
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CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures were $1,769 million for the
first six months of 2000, compared with $1,458 million for 1999.
Led by a 57 percent increase in our international segment, total
upstream expenditures increased 24 percent as we continued to focus on
high margin, high impact projects. Investment continued in the
Malampaya natural gas project in the Philippines and the Karachaganak
field in Kazakhstan. In addition to spending on these projects,
expenditures for platform development work continued on the Captain B
project in the U.K. North Sea. In the United States, upstream spending
decreased by 17 percent primarily due to the completion, last year, of
the Gemini project in the Deepwater Gulf of Mexico.
In the United States downstream, refinery expenditures declined as
we continued to reduce our exposure to the refining business with the
sale of our El Dorado refinery in November of 1999 and the Wood River
refinery in June of 2000. Internationally, expenditures decreased due
to the completion of a project at the Pembroke refinery last year and
lower marketing investments in Latin America.
Expenditures for Global Gas and Power more than doubled from last
year primarily from the purchase of a 20 percent interest in Energy
Conversion Devices, Inc., which develops and commercializes enabling
technologies for use in the fields of alternative energy and
information technologies. This investment further advances our goal to
be a leader in the development and commercialization of advanced,
environmentally smart alternative energy technologies.
- xxx -
CONTACT: Andy Norman 914-253-4068
INVESTOR RELATIONS:
Elizabeth Smith 914-253-4478
Listen in live to Texaco's second quarter 2000 earnings discussion
with financial analysts on Thursday, July 27th at 11:30 am EDT at:
http://www.webevents.broadcast.com/texaco/q200earnings
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For technical assistance, call Sheila Lujan at 800-366-9831
Note: This press release contains a number of forward-looking
statements within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. In particular,
statements made concerning Texaco's expected performance and financial
results in future periods are based upon Texaco's current expectations
and beliefs and are subject to a number of known and unknown risks and
uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. The following
factors known to Texaco, among others, could cause Texaco's actual
results to differ materially from those described in the
forward-looking statements: decreased demand for motor fuels, natural
gas and other products; worldwide and industry economic conditions;
inaccurate forecasts of crude oil, natural gas and petroleum product
prices and production; higher costs, expenses and interest rates; etc.
In addition, you are encouraged to review Texaco's latest reports
filed with the SEC, including Texaco's Annual Report on Form 10-K
filed with the SEC on March 24, 2000, which describes a number of
additional risks and uncertainties that could cause actual results to
vary materially from those listed in the forward-looking statements
made in this press release.
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Income (loss) Second Quarter(a) Six Months(a)
(Millions of dollars) ------------------ ---------------
2000 1999 2000 1999
----- ---- ---- ----
Exploration and production
United States $ 353 $ 148 $ 647 $ 186
International 261 78 554 60
----- ----- ------ -----
Total 614 226 1,201 246
Refining, marketing
and distribution
United States 45 24 63 86
International 90 151 141 371
----- ----- ------ -----
Total 135 175 204 457
Global gas and power - 1 20 7
----- ----- ------ -----
Total operating
segments 749 402 1,425 710
----- ----- ------ -----
Other business units (2) (1) (2) (2)
Corporate/Non-operating (122) (128) (224) (236)
----- ----- ------ -----
Net income $ 625 $ 273 $1,199 $ 472
===== ===== ====== =====
Net income per common
share (dollars) -
diluted $1.14 $ .50 $ 2.19 $ .85
Average number of
common shares
outstanding for
computation of
earnings per share
(millions) - diluted 544.4 530.2 544.9 529.6
Provision for income
taxes included in
net income $ 404 $ 122 $ 767 $ 107
(a) Includes special items indicated in this release.
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Other Financial Data Second Quarter Six Months
(Millions of dollars) -------------- ---------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues $12,069 $ 8,269 $23,340 $15,459
Total assets as of
June 30 $29,700(b) $28,195
Stockholders' equity
as of June 30 $12,680(b) $11,814
Total debt as of June 30 $ 7,100(b) $ 7,377
Capital and exploratory
expenditures
Exploration and production
United States $ 209 $ 205 $ 384 $ 461
International 526 340 879 561
------- -------- ------ -------
Total 735 545 1,263 1,022
Refining, marketing
and distribution
United States 71 85 136 158
International 41 99 141 176
------- -------- ------ ------
Total 112 184 277 334
Global gas and power 156 51 184 86
------- -------- ------ ------
Total operating
segments 1,003 780 1,724 1,442
Other business units 42 9 45 16
------- -------- ------ ------
Total $ 1,045 $ 789 $1,769 $ 1,458
======= ======== ====== =======
Exploratory expenses
included above
United States $ 22 $ 38 $ 41 $ 92
International 38 42 72 118
------- -------- ------ -------
Total $ 60 $ 80 $ 113 $ 210
======= ======== ====== =======
Dividends paid to
common stockholders $ 244 $ 237 $ 489 $ 474
Dividends per common
share (dollars) $ .45 $ .45 $ .90 $ .90
Dividend requirements
for preferred
stockholder $ 4 $ 10 $ 7 $ 23
(b) Preliminary
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Operating Data Second Quarter Six Months
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2000 1999 2000 1999
---- ---- ---- ----
Exploration and
production
United States
Net production of
crude oil and
natural gas liquids
(MBPD) 364 399 371 404
Net production of
natural gas available
for sale (MMCFPD) 1,349 1,479 1,355 1,483
------ ------ ------ ------
Total net
production (MBOEPD) 589 646 597 651
Natural gas sales
(MMCFPD) 4,054 3,015 3,724 3,295
Average U.S. crude
(per bbl.) $24.90 $12.80 $24.67 $10.95
Average U.S. natural
gas (per mcf) $ 3.28 $ 2.05 $ 2.86 $ 1.92
Average WTI (Spot)
(per bbl.) $28.97 $17.66 $28.94 $15.44
Average Kern (Spot)
(per bbl.) $23.17 $11.26 $23.00 $ 9.49
International
Net production of
crude oil and natural
gas liquids (MBPD)
Europe 98 143 120 136
Indonesia 124 150 124 165
Partitioned
Neutral Zone 136 121 135 119
Other 64 69 68 67
------ ------ ------ ------
Total 422 483 447 487
Net production of
natural gas available
for sale (MMCFPD)
Europe 205 244 248 265
Colombia 188 160 197 157
Other 145 112 148 111
------ ------ ------ ------
Total 538 516 593 533
------ ------ ------ ------
Total net
production (MBOEPD) 512 569 546 576
Natural gas sales
(MMCFPD) 567 549 626 557
Average International
crude (per bbl.) $23.64 $13.73 $23.47 $11.60
Average International
natural gas (per mcf) $ 1.44 $ 1.23 $ 1.46 $ 1.37
Average U.K. natural
gas (per mcf) $ 2.27 $ 2.17 $ 2.32 $ 2.39
Average Colombia
natural gas (per mcf) $ 1.12 $ .59 $ 1.03 $ .62
Total worldwide
net production
(MBOEPD) 1,101 1,215 1,143 1,227
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Operating Data Second Quarter Six Months
-------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
Refining, marketing
and distribution
United States
Refinery input (MBPD)
Equilon area 295 373 286 369
Motiva area 279 313 270 307
----- ----- ----- -----
Total 574 686 556 676
Refined product
sales (MBPD)
Equilon area 760 710 725 641
Motiva area 365 376 353 378
Other 344 291 318 299
----- ----- ----- ------
Total 1,469 1,377 1,396 1,318
International
Refinery input (MBPD)
Europe 385 368 375 367
Caltex area 361 416 354 427
Latin America/West Africa 64 72 58 73
----- ----- ----- -----
Total 810 856 787 867
Refined product sales
(MBPD)
Europe 616 601 626 619
Caltex area 563 663 588 667
Latin America/West Africa 466 501 457 489
Other 91 82 92 93
----- ----- ----- -----
Total 1,736 1,847 1,763 1,868