Atlantic Richfield - 1st Quarter Results
24 April 1998 - 7:18PM
UK Regulatory
RNS No 4316e
ATLANTIC RICHFIELD CO
23rd April 1998
ARCO REPORTS 1998 FIRST QUARTER EARNINGS, MAINTAINS
PRODUCTION AND MARKETING GROWTH EXPECTATIONS
LOS ANGELES - ARCO (NYSE: ARC) today reported preliminary 1998 first quarter net
income of $220 million, or $0.67 per diluted share. Excluding special items and
earnings from discontinued coal operations, first quarter income totaled $202
million, or $0.62 per share. ARCO announced March 23 that it had reached
agreement to sell its domestic coal assets. The sale is expected to close in the
1998 second quarter.
In the 1997 first quarter, ARCO's earnings totaled $483 million, or $1.48 per
diluted share, or $460 million and $1.41 per share excluding the discontinued
coal operations.
PRODUCTION IN LINE WITH 5-YEAR GROWTH PLAN
Mike R. Bowlin, ARCO Chairman and Chief Executive Officer, said "Falling oil
prices which reduced our earnings are the story of the first quarter." Bowlin
added, "Our oil and natural gas production was essentially flat with the first
quarter of last year. Volumes of oil and gas production in the Lower 48 and
liquids production internationally were up but were offset by lower volumes in
Alaska due to maintenance and natural field decline and by lower natural gas
takes in Asia. We still expect ARCO's worldwide production for 1998 to increase
about 2% versus 1997 and grow by 4-5% annually through 2001.
"Downstream, gasoline sales volumes increased over 1 1% reflecting the addition
of retail outlets in California and Vancouver, British Columbia."
FUTURE GROWTH INITIATIVES STRENGTHENED
Bowlin said the 1998 first quarter was productive in terms of progress toward
ARCO's three key upstream initiatives: to stabilize production in Alaska,
modestly grow our Lower 48 production and substantially increase international
production.
"In Alaska, progress continued on the key production goal of 'No Decline After
'99. Development of the new 365-million-barrel Alpine field is underway. We
horizontally drilled the first of three pipelines beneath the Colville River.
These pipelines will carry liquids to and from the field. We also announced two
satellite discoveries near Prudhoe Bay, adding to the successful results of
our ongoing multi-year satellite exploration program."
The company's publicly-traded subsidiary, Vastar Resources, Inc. (NYSE: VRI),
announced discoveries on the Gulf of Mexico shelf and at the King prospect in
the deepwater Gulf of Mexico and further strengthened its position with new
exploration acreage in the deepwater.
Continuing expansion of its interests in Latin America, ARCO obtained new
exploration acreage offshore Trinidad. In Venezuela, ARCO and its partners
submitted a plan for redevelopment of the LL-652 acreage in Lake Maracaffio, a
20-year project which will tap an estimated 500 million gross barrels of
recoverable reserves. ARCO has a 20% interest in LL-652. Also in Venezuela,
redevelopment of the Kaki block has been approved and a plan of development for
the adjacent Maulpa block has been submitted to the government. ARCO has a 56%
interest in Kaki and Maulpa.
In the United Kingdom, work continues toward the 2000 start up of the Central
North Sea Shearwater gas condensate field, in which ARCO has a 27.5% interest.
The company also announced another gas discovery in the Central North Sea.
OIL AND GAS EARNINGS REFLECT LOWER PRICES
ARCO's worldwide exploration and production operations earned $182 million
after-tax in the 1998 first quarter, compared with $452 million in the 1997
first quarter. ARCO's average domestic petroleum liquids price in the first
quarter was $11.10 per barrel, compared with $18.38 per barrel in the 1997
first quarter.
On an oil equivalent basis, ARCO produced 966 million barrels per day in the
1998 first quarter, essentially unchanged from the 1997 first quarter level of
967 million barrels.
Exploration costs for the quarter were $149 million before tax compared to $126
million in the first quarter of 1997.
REFINING AND MARKETING
ARCO's refining and marketing operations earned $19 million after-tax in the
1998 first quarter, down from $46 million in 1997's first quarter. Margins
were down as realized prices for gasoline, jet fuel and diesel all fell
significantly due to higher West Coast inventories. Contributing to the
excess inventories were high levels of jet fuel imports from Asia, where the
financial crisis reduced demand, and the weather-related impact from El Nino.
In the 1998 first quarter, ARCO's Los Angeles Refinery had $20 million in
turnaround expenses.
The successful integration of the Thrifty-leased retail sites in California and
the newly acquired sites in British Columbia contributed to the 11 % increase in
retail gasoline volumes. Increased station throughputs from ARCO's existing
network plus the new sites have strengthened ARCO's competitive position in the
Western United States and Canada.
CHEMICALS
After-tax earnings from ARCO's 82.3% interest in ARCO Chemical Company
totaled $84 million for the quarter, compared with $50 million in the 1997 first
quarter.
Core product sales volumes, which include propylene oxide (PO), PO
derivatives and toluene diisocyanate (TDI), rose 7% compared to first quarter of
1997 primarily due to healthy demand. Costs declined during the quarter as a
result of lower raw materials costs and the company's cost reduction program.
OTHER OPERATIONS
Other operations contributed after-tax earnings of $24 million in the 1998
first quarter, compared with $43 million in the 1997 first quarter.
The 1997 first quarter included $30 million in after-tax earnings from ARCO's
equity interest in Lyondell Petrochemical Company. ARCO disposed of its interest
in Lyondell in the third quarter of 1997.
DISCONTINUED OPERATIONS AND SPECIAL ITEMS
The 1998 and 1997 first quarter results included after-tax income from the
discontinued coal operations of $10 million and $23 million, respectively.
First quarter 1998 special item benefits (charges) included the following:
R&M UNALLOCATED TOTAL
Tax-related adjustments $- $ 13 $13
Environmental remediation (1) (5) (6)
Other 1 - 1
Total $1 $8 $8
ARCO had no special items in the 1997 first quarter.
(NOTE to Editors: ARCO Chemical Company (NYSE: RCM) reported earnings on
April 21; Vastar Resources, Inc. (NYSE: VRI) announced earnings on April 16.)
(Some of the matters discussed in this news release are forward-looking
statements that involve risks and uncertainties. Actual results could differ
materially based on numerous factors, including the realized level of crude oil
and natural gas production and other risks detailed from time to time in the
company's SEC reports including the 1997 report on Form 10-K)
For added information, contact:
(Media) Albert Greenstein, 213-486-3384;
(Investors) Dennis Schiffel, 213-486-1511; or e-mail to: arconews@arco.com
ATLANTIC RICHFIELD COMPANY CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(Millions except per share amounts)
Three Months Ended March 31
1998 1997
REVENUES
Sales and other operating revenues $ 3,431 $4,850
Other revenues 119 130
Total revenues 3,550 4,980
EXPENSES
Trade purchases 1,306 2,234
Operating expenses 804 859
Selling, general and administrative expernses 270 270
Depreciation, depletion and amortization 404 404
Exploration expenses (including undeveloped
leasehold amortization) 149 126
Taxes other than income taxes 175 216
Interest (a) 115 166
Total expenses 3,223 4,275
Income from continuing operations before
Income taxes and minority Interest 327 705
Provision for taxes on Income 90 224
Minority Interest In earnings of subsidiaries 27 21
Income from continuing operations 210 460
Income from discontinued operations,
net of Income taxes of $3 (1998) and $11 (1997) 10 23
Net income $ 220 $ 483
Earned per share (b):
Continuing operations - Basic $ 0.65 $ 1.43
Continuing operations - Diluted $ 0.64 $ 1.41
Net income - Basic $ 0.69 $ 1.50
Net income - Diluted $ 0.67 $ l.48
Weighted average equivalent shares outstanding (b)
Basic 320.6 322.2
Diluted 327.2 327.0
Dividends per common share $ 0.7125 $ 0.6875
(a) Excludes capitalized Interest of $18 million and $3 million for the three-
month periods ended March 31, 1998 and 1997 respectively.
(b) Prior year share and per share data is restated for the effect of the
second quarter 1997 100% stock dividend.
AFTER-TAX SEGMENT EARNINGS
(Unaudited)
(Millions)
Three Months Ended March 31
1998 1997
Exploration and production $ 182 $ 452
Refining and marketing 19 46
Chemicals 84 50
Other 24 43
Unallocated expenses (17) (19)
Interest expense (82) (112)
Income from continuing operations 210 460
Discontinued operations 10 23
Net Income $ 220 $ 483
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END
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