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):
April 26, 2001
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
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On April 26, 2001, the Registrant issued an Earnings Press Release entitled
"Texaco Reports First Quarter 2001 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
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(c) Exhibits
99.1 Press Release issued by Texaco Inc. dated April 26, 2001,
entitled "Texaco Reports First Quarter 2001 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: April 26, 2001
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TEXACO REPORTS FIRST QUARTER 2001 RESULTS
-----------------------------------------
FOR IMMEDIATE RELEASE: THURSDAY, APRIL 26, 2001.
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WHITE PLAINS, N.Y., April 26 -- Texaco reported today
first quarter 2001 income before special items of $836 million ($1.54 per
share). Net income for the period was $833 million ($1.53 per share).
EARNINGS SUMMARY
First Quarter
------------------
2001 2000
- ----------------------------------------------------------------------
Income before special
items (millions) $ 836 $ 602
Per Share $1.54 $1.10
Net Income (millions) $ 833 $ 574
Per Share $1.53 $1.05
- ----------------------------------------------------------------------
Chairman and Chief Executive Officer Glenn Tilton commented, "Our outstanding
first quarter results follow our record fourth quarter and mark the third
consecutive quarter that earnings surpassed $800 million. Propelled by strong
worldwide crude oil and U.S. natural gas prices, our upstream results were their
highest ever. Operationally, we exceeded our production target for the quarter
and made excellent progress on our major development projects. In the
Philippines, the topsides of the Malampaya project platform were set and we
remain on target for first production in the fourth quarter with first delivery
of gas in January 2002. In the U.K. North Sea we are drilling new producing
wells at the Captain B expansion project which will ramp up field production
this year by 25,000 barrels per day by the third quarter.
"We also continue to progress our high-impact international deepwater
exploration program. In Nigeria, the Agbami 3 well successfully appraised the
west end of the field extending its areal limits. In Brazil, our drilling
program began with the drilling of two of five planned exploration wells.
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"Downstream earnings were mixed. While refining margins improved in some
areas, including the U.S. East and Gulf Coasts where Motiva operates, high
utility costs and tight margins burdened refining results elsewhere. Competitive
pressures in all regions, especially the U.S. West Coast, caused lower retail
marketing results as these operations were unable to fully recover product
supply costs."
Commenting on Texaco's proposed merger with Chevron, Tilton
added, "We continue to make good progress toward the completion of our proposed
merger with Chevron. In February, our companies announced the leadership team
and high-level organization structure for the post-merger company. The European
Commission has given its approval of the merger without conditions. The U.S.
Federal Trade Commission continues its review."
First Quarter
---------------
Texaco Inc. (Millions of dollars): 2001 2000
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Income before special items $ 836 $ 602
---- ----
Net losses on major asset sales - (67)
Tax issue - 46
Litigation issue - (13)
Employee related costs - 6
Merger costs (3) -
---- ----
Special items (3) (28)
---- ----
Net income $ 833 $ 574
==== ====
Details on special items are included in the following segment information.
OPERATING RESULTS
EXPLORATION AND PRODUCTION
First Quarter
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United States (Millions of dollars): 2001 2000
- ----------------------------------------------------------------------
Operating income before special items $ 589 $ 361
Special items - (67)
---- ----
Total operating income $ 589 $ 294
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U.S. Exploration and Production earnings for the first quarter of 2001 were
significantly higher than last year due to higher natural gas prices. U.S.
natural gas prices reached historic levels during the first quarter, reflecting
low inventories and strong demand. Texaco's average realized natural gas price
was $7.14 per thousand cubic feet (MCF) during the first quarter, 191 percent
higher than last year.
Texaco's average realized crude oil price was $24.31 per barrel for the
first quarter, down slightly from last year. Crude oil prices continue to react
to changes in global demand, production levels and petroleum inventories which
remain lean.
Daily production for the first quarter of 2001 was 534,000 barrels of oil
equivalent per day, 12 percent lower than last year. More than half of this
expected reduction was due to last year's sales of non-core producing
properties. The balance of the decrease was due to natural field declines and
lower production in our California fields as we economically reduced steam
production due to high natural gas prices.
Operating expenses were 13 percent higher in the first quarter as natural gas
prices led to significantly higher utilities expenses and production taxes.
Exploratory expenses for the quarter were $33 million before tax, $14 million
higher than last year.
Results for the first quarter of 2000 included a special charge of $67
million for net losses on the sales of non-core producing properties.
First Quarter
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International (Millions of dollars): 2001 2000
- ----------------------------------------------------------------------
Operating income before special items $ 243 $ 293
Special items - -
---- ----
Total operating income $ 243 $ 293
==== ====
International Exploration and Production operating results for the first
quarter of 2001 were lower than last year due to decreased production volumes
and lower crude oil sales volumes. Daily production was 564,000 barrels of oil
equivalent per day in the first quarter 2001, down three percent or 17,000
barrels per day from last year. Last year's sales of non-core producing
properties caused a decrease of 40,000 barrels per day or seven percent. Partly
offsetting this decrease were higher lifting entitlements in Indonesia as a
result of lower crude oil prices and increased production in the Karachaganak
field in the Republic of Kazakhstan and in the Partitioned Neutral Zone.
However, crude oil sales volumes were lower than last year due to the timing of
liftings in the North Sea.
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Market conditions kept natural gas prices strong throughout the first
quarter, while crude oil prices receded slightly. Texaco's average realized
crude oil price for the first quarter was $21.61 per barrel, down seven percent
from last year. Our average realized natural gas price was $2.00 per MCF in the
first quarter, up 35 percent from last year.
Operating expenses decreased 12 percent in the first quarter due to the sales
of non-core producing properties. Exploratory expenses for the first quarter
were $16 million before tax, $18 million lower than last year.
REFINING, MARKETING AND DISTRIBUTION
First Quarter
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United States (Millions of dollars): 2001 2000
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Operating income before special items $ 38 $ 13
Special items - 5
---- ----
Total operating income $ 38 $ 18
==== ====
U.S. Refining, Marketing and Distribution earnings improved as compared with
the extremely low results in 2000.
Motiva's earnings for the first quarter benefited from significantly higher
refining margins in an environment of tight supplies and industry refinery
maintenance, although higher utilities expense and scheduled maintenance at the
Port Arthur refinery reduced those earnings. While refining results improved,
marketing margins were negatively impacted by higher supply costs, which were
not fully recovered in the market.
First quarter earnings for Equilon improved due to substantially higher
refining margins and improved refinery operations. Earnings also benefited from
higher utilization of proprietary pipelines, higher lubricant margins and
improved trading results. These improvements were negatively impacted by
extremely high West Coast utilities expense. Also, marketing earnings for
Equilon declined from last year due to depressed fuel marketing margins as pump
prices lagged increases in supply costs in a very competitive market. This was
especially true in the Los Angeles area where retail fuel margins were under
intense pressure.
Results for the first quarter of 2000 included net special benefits of $5
million comprised of a benefit of $18 million for an employee benefits revision
and a charge of $13 million for a patent litigation issue.
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First Quarter
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International (Millions of dollars): 2001 2000
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Operating income before special items $ 88 $ 63
Special items - (12)
---- ----
Total operating income $ 88 $ 51
==== ====
International Refining and Marketing earnings for the first quarter of 2001
increased from last year. Earnings improved in the Asia Pacific area due to
higher marketing margins from lower product acquisition costs and higher trading
results.
Operating results for the first quarter of 2001 decreased in Europe from last
year due to weak markets, particularly in the U.K. Decreased margins in both
refining and marketing operations resulted from our inability to recover higher
supply costs in the marketplace. Results in Latin America were in line with last
year with improved refining earnings but lower marketing results.
Results for the first quarter of 2000 included a special charge of $12
million for employee separation costs.
GLOBAL GAS, POWER AND ENERGY TECHNOLOGY
First Quarter
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(Millions of dollars): 2001 2000
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Operating income before special items $ 5 $ 20
Special items - -
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Total operating income $ 5 $ 20
==== ====
Results for the first quarter of 2001 were lower than last year. This year's
results include higher costs and expenses for a new gasification project in
Singapore. Results were also negatively impacted by higher fuel expense for the
cogeneration facilities. In our U.S. natural gas trading operations,
significantly improved natural gas margins and trading results were reduced by
lower NGL margins.
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CORPORATE/NON-OPERATING RESULTS
First Quarter
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(Millions of dollars): 2001 2000
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Operating income before special items $ (124) $ (148)
Special items (3) 46
---- ----
Total operating income $ (127) $ (102)
==== ====
Corporate and non-operating results for the first quarter of 2001 benefited
from lower interest expense and lower advertising and sales promotion expenses.
Results for the first quarter of 2001 included a special charge of $3 million
for costs associated with the proposed merger with Chevron. Results for 2000
included special benefits of $46 million for favorable income tax settlements.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures were $761 million for the first quarter
of 2001, compared with $724 million for 2000.
Total upstream expenditures increased more than 19 percent over 2000 levels
as we continued to focus resources on high impact projects. Internationally,
development work continued in the Malampaya natural gas project in the
Philippines, the Agbami field offshore Nigeria and the Hamaca heavy oil project
in Venezuela. In Kazakhstan, development work also continued in the Karachaganak
and North Buzachi fields. In the U.S., spending focused on drilling and workover
activity in the Gulf and Permian regions.
Downstream expenditures in the U.S. were in line with the prior year, while
international activity reflected a slowing in marketing spending. Global Gas,
Power and Energy Technology spending is lower than last year due to project
completions in Thailand, Korea and Singapore.
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CONTACTS: Paul Weeditz 914-253-7745
Keelin Molloy 914-253-7461
INVESTOR RELATIONS: Elizabeth Smith 914-253-4478
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Listen in live to Texaco's first quarter 2001 earnings discussion with
financial analysts on Thursday, April 26th at 11:30 am EDT at:
http://www.webevents.broadcast.com/texaco/q101earnings
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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; the possibility that the merger with Chevron will not be consummated; the
possibility that the anticipated benefits from the merger such as cost
reductions will not be fully realized; the process of, or conditions imposed in
connection with, obtaining regulatory approvals for the merger; 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
26, 2001, 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) First Quarter (a)
(Millions of dollars) --------------------
2001 2000
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Exploration and production
United States $ 589 $ 294
International 243 293
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Total 832 587
Refining, marketing and distribution
United States 38 18
International 88 51
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Total 126 69
Global gas, power and energy
technology 5 20
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Total operating segments 963 676
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Other business units (3) -
Corporate/Non-operating (127) (102)
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Net income $ 833 $ 574
===== =====
Net income per common share
(dollars) - diluted $1.53 $1.05
Average number of common
shares outstanding for
computation of earnings
per share (millions) - diluted 543.0 545.5
Provision for income
taxes included in net
income $ 568 $ 363
(a) Includes special items indicated in this release.
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Other Financial Data First Quarter
(Millions of dollars) --------------------
2001 2000
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Revenues $ 14,134 $ 11,271
Total assets as of March 31 $ 32,200(b) $ 29,415
Stockholders' equity as of March 31 $ 14,100(b) $ 12,374
Total debt as of March 31 $ 6,900(b) $ 7,415
Capital and exploratory
expenditures
Exploration and production
United States $ 214 $ 175
International 417 353
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Total 631 528
Refining, marketing and
distribution
United States 63 65
International 52 100
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Total 115 165
Global gas, power and
energy technology 12 28
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Total operating
segments 758 721
Other business units 3 3
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Total $ 761 $ 724
======== ========
Exploratory expenses (c)
United States $ 33 $ 19
International 16 34
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Total $ 49 $ 53
======== ========
Dividends paid to
common stockholders $ 243 $ 245
Dividends per common
share (dollars) $ .45 $ .45
Dividend requirements
for preferred
stockholders $ 3 $ 3
(b) Preliminary
(c) Includes prior years' exploratory expenditures expensed in the
current year
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Operating Data First Quarter
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2001 2000
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Exploration and production
United States
Net production of
crude oil and natural
gas liquids (MBPD) 325 377
Net production of
natural gas available
for sale (MMCFPD) 1,255 1,361
------ ------
Total net production
(MBOEPD) 534 604
Natural gas sales
(MMCFPD) 4,627 3,394
Average U.S. crude
(per bbl.) $24.31 $24.46
Average U.S. natural
gas (per mcf) $ 7.14 $ 2.45
Average WTI (Spot)
(per bbl.) $28.72 $28.91
Average Kern (Spot)
(per bbl.) $19.89 $22.84
International
Net production of
crude oil and
natural gas liquids
(MBPD)
Europe 119 144
Indonesia 133 124
Partitioned Neutral
Zone 147 135
Other 55 70
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Total 454 473
Net production of natural
gas available
for sale (MMCFPD)
Europe 267 289
Colombia 202 208
Other 188 152
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Total 657 649
------ ------
Total net production
(MBOEPD) 564 581
Natural gas sales
(MMCFPD) 673 685
Average International crude
(per bbl.) $21.61 $23.32
Average International
natural gas (per mcf) $ 2.00 $ 1.48
Average U.K. natural
gas (per mcf) $ 3.63 $ 2.63
Average Colombia natural
gas (per mcf) $ 1.40 $ .94
Total worldwide net
production (MBOEPD) 1,098 1,185
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Operating Data First Quarter
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2001 2000
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Refining, marketing
and distribution
United States
Refinery input
(MBPD)
Equilon area 198 277
Motiva area 309 265
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Total 507 542
Refined product sales
(MBPD)
Equilon area 651 690
Motiva area 416 341
Other 375 292
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Total 1,442 1,323
International
Refinery input
(MBPD)
Europe 365 364
Caltex area 365 346
Latin America/West Africa 66 52
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Total 796 762
Refined product sales
(MBPD)
Europe 584 635
Caltex area 523 580
Latin America/West Africa 519 448
Other 163 95
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Total 1,789 1,758