ARCO 1Q 2000 Results
BP Amoco PLC
9 May 2000
Atlantic Richfield Company
US GAAP Results
1st Quarter 2000
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ARCO ANNOUNCES FIRST QUARTER NET INCOME OF $617 MILLION
===========================================================================
o ARCO acquisition by BP Amoco completed.
o First quarter 2000 net income was $583 million, after adjusting for
special items of $34 million, this represents an increase of 239% on a
year ago.
o Excellent progress on cost reductions.
ARCO, which was acquired by BP Amoco on 18 April, 2000, had first quarter
net income of $617 million, or $1.87 per diluted share. In the 1999 first
quarter, ARCO earned $165 million, or 51 cents per diluted share.
Excluding special items, first quarter 2000 income from operations totalled
$583 million, or $1.77 per diluted share, up from $172 million, or 53 cents
per diluted share, in the 1999 first quarter. Special items in the 2000
first quarter included gains on asset sales partially offset by accruals for
litigation, environmental and merger-related costs.
Adjusting for the earnings from the Exploration and Production Alaskan
assets that have now been sold to Phillips Petroleum, the first quarter
income from operations, before special items, was $333 million or $1.01 per
diluted share which compares with $141 million or $0.43 per diluted share
last year. There were no special items relating to Alaska in either quarter.
Increased crude oil and US natural gas prices offset production declines in
the first quarter while ARCO's West Coast refining and marketing continued
its strong performance despite higher feedstock prices resulting in lower
margins compared with the first quarter 1999.
Cost Reduction Programme
ARCO launched an aggressive cost reduction programme, in October 1998, to
reduce yearly before-tax expenses by $500 million in the year 2000. ARCO has
now fully delivered on this target, the results of which are reflected in
this quarter's results.
Exploration and Production
Higher commodity prices and operating cost reductions resulted in ARCO's
worldwide Exploration and Production operations earning $601 million after
tax and before special items in the first quarter, up from $89 million after
tax in the first quarter of 1999. Special items in the quarter were gains on
asset dispositions of $58 million after tax.
Excluding the Alaska assets, ARCO's remaining worldwide upstream assets
earned $293 million after tax and before special items, in the first quarter
of this year compared with $58 million in the corresponding period last
year.
US petroleum liquids realizations averaged $21.28 per barrel for the quarter
compared with $7.17 per barrel last year. US natural gas prices averaged
$2.18 per thousand cubic feet (mcf) up from $1.60 per mcf last year. On the
international side, average liquid realizations were $22.08 per barrel,
compared with $9.16 per barrel last year while average natural gas
realizations were $2.36 per mcf, compared to $2.47 per mcf last year.
Worldwide oil and natural gas production averaged 1,009 thousand barrels of
oil equivalent per day, down 9% from last year's first quarter level of
1,104 thousand barrels of oil equivalent per day. Asset sales, production
sharing contract effects, and anticipated field declines contributed to the
reduced production levels. Liquids production for the quarter totalled 589
thousand barrels per day (mbd) compared to 672 mbd for the same period last
year, while natural gas production totalled 2,520 million cubic feet per day
(mmcfd) compared to 2,588 mmcfd last year.
Excluding the Alaska assets, liquids production for the quarter totalled
281,000 barrels per day (mbd), compared to 327 mbd for the same period last
year.
Quarterly exploration expenses increased to $100 million from $74 million
last year. Increased dry hole expenses due to an unsuccessful deepwater well
drilled by Vastar Resources, Inc., (NYSE: VRI), were partially offset by
reduced exploration expenses in the company's international operations. ARCO
holds an 81.9% interest in Vastar, which previously announced its third
consecutive quarterly earnings record.
Refining and Marketing
ARCO's refining and marketing operations earned $93 million after tax and
before special items in the quarter, compared to $131 million after tax in
the first quarter of 1999. Reduced integrated light product margins coupled
with expenses from turnaround activity at the Los Angeles Refinery accounted
for the reduction from last year. A special item charge of $23 million,
primarily a result of estimated costs for the Unocal patent suit, resulted
in net earnings of $70 million for the quarter, down from $129 million in
the first quarter of 1999.
Other Operations
Other operations, primarily the lower 48 pipeline and aluminium business,
contributed $14 million as compared to $24 million in the prior year.
Reduced volumes impacted both pipeline and aluminium during the quarter.
Unallocated expenses contributed $12 million before special items as
compared to the previous year's loss of $2 million before special items.
Continued realization of cost reduction activities along with insurance and
tax benefits drove the improvement in this area.
Consolidated Statement of Income
Preliminary
(Unaudited)
First First
Quarter Quarter
2000 1999
==================
$ million
REVENUES
Sales and other operating revenues 3,993 2,415
Other revenues 201 136
------------------
Total revenues 4,194 2,551
------------------
EXPENSES
Trade purchases 1,685 800
Operating expenses 600 566
Selling, general and administrative expenses 136 152
Depreciation, depletion and amortization 484 483
Exploration expenses (including undeveloped
leasehold amortization) 100 74
Taxes other than income taxes 177 120
Interest(a) 110 95
------------------
Total expenses 3,292 2,290
------------------
Income from continuing operations before income
taxes and minority interest 902 261
Provision for taxes on income 271 93
Minority interest in earnings of subsidiaries 14 3
------------------
Net income 617 165
==================
Earnings per share:
Basic $1.91 $0.51
Diluted $1.87 $0.51
Dividends per common share $0.7125 $0.7125
==================
(a) Excludes capitalized interest of: 36 39
After-Tax Segment Earnings
Preliminary
(Unaudited)
First First
Quarter Quarter
2000 1999
==================
$ million
Exploration and production 601 89
Refining and marketing 70 129
Other (a) 14 24
Unallocated expenses 11 (7)
Interest expense (79) (70)
------------------
Net income 617 165
==================
Segment Operating Income
(Preliminary)
(Unaudited)
------------------ 1Q 2000 ------------------
Special items Before
Reported (charge) benefit Special items
=============================================
$ million
Exploration and production 601 58 543
Refining and marketing 70 (23) 93
Other* 14 - 14
Unallocated expenses 11 (1) 12
Interest expense (79) - (79)
---------------------------------------------
Net income 617 34 583
=============================================
Average shares outstanding (diluted)
(million) 329.1 329.1
Earnings per share $1.87 $1.77
======== ========
------------------ 1Q 1999 ------------------
Special items Before
Reported (charge) benefit Special items
=============================================
$ million
Exploration and production 89 - 89
Refining and marketing 129 (2) 131
Other* 24 - 24
Unallocated expenses (7) (5) (2)
Interest expense (70) - (70)
---------------------------------------------
Net income 165 (7) 172
=============================================
Average shares outstanding (diluted)
(million) 327.2 327.2
Earnings per share $0.51 $0.53
======== ========
* Consists of ARCO Pipeline (Lower 48 pipelines)and aluminium operations.
Consolidated Balance Sheet
Preliminary
(Unaudited)
31 March 31 December
2000 1999
===================
$ million
ASSETS
Current assets:
Cash and cash equivalents 1,007 879
Short-term investments 253 264
Accounts receivable 1,406 1,301
Inventories 385 430
Prepaid expenses and other current assets 199 184
-------------------
Total current assets 3,250 3,058
-------------------
Investments and long-term receivables:
Investments accounted for on the equity method 1,568 1,508
Other investments and long-term receivables 1,894 1,660
-------------------
3,462 3,168
-------------------
Net property, plant and equipment 18,173 18,466
Net assets of discontinued operations 51 67
Deferred charges and other assets 1,580 1,513
-------------------
Total assets 26,516 26,272
===================
Consolidated Balance Sheet
Preliminary
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
31 March 31 December
2000 1999
===================
$ million
Current liabilities:
Notes payable 1,488 1,672
Accounts payable 883 830
Taxes payable 579 420
Long-term debt due within one year 11 11
Other 903 1,090
-------------------
Total current liabilities 3,864 4,023
Long-term debt 5,600 5,698
Deferred income taxes 3,643 3,644
Dismantlement, restoration and reclamation 1,174 1,154
Other deferred liabilities and credits 2,710 2,770
Minority interest 309 297
-------------------
Total liabilities 17,300 17,586
-------------------
Stockholders' equity:
Preference stocks 1 1
Common stock 818 817
Capital in excess of par value of stock 918 889
Retained earnings 7,476 7,091
Treasury stock (272) (279)
Accumulated other comprehensive income 275 167
-------------------
Total stockholders' equity 9,216 8,686
-------------------
Total liabilities and stockholders' equity 26,516 26,272
===================
Financial and Statistical Data
Preliminary
(Unaudited)
First First
Quarter Quarter
2000 1999
==================
$ million
Additions to fixed assets
Exploration and production (including dry hole costs) 541 642
Refining and marketing 78 104
Other - 14
------------------
Total 619 760
==================
Exploration and production
Pretax earnings before exploration expense:
Alaska 415 59
International 293 61
Vastar 151 34
Other Lower 48 operations 109 44
------------------
968 198
Exploration expense 100 74
------------------
Exploration & production pretax earnings 868 124
==================
Pretax exploration expense:
Alaska 17 12
International 13 22
Vastar 69 39
Other Lower 48 1 1
------------------
Total exploration expense 100 74
==================
After-tax exploration and production earnings
Alaska 250 31
International 222 19
Vastar 77 19
Other Lower 48 52 20
------------------
Total 601 89
==================
Financial and Statistical Data
Preliminary
(Unaudited)
First First
Quarter Quarter
2000 1999
==================
OPERATING STATISTICS
EXPLORATION AND PRODUCTION
Crude, condensate and NGL production
(net thousand bbls/day):
United States:
Prudhoe Bay 129.0 144.7
Kuparuk 99.6 121.4
Greater Point McIntyre 26.0 33.9
Tarn 13.1 9.8
NGLs/Other 39.6 35.3
------------------
Total Alaska 307.3 345.1
Vastar liquids 66.8 55.9
Other Lower 48 liquids 75.7 92.2
------------------
Total United States 449.8 493.2
------------------
International:
United Kingdom 45.2 50.1
Indonesia 18.3 40.4
Venezuela 30.6 31.5
Algeria 16.7 20.8
NGLs/Other 27.9 36.3
------------------
Total International (a) 138.7 179.1
------------------
Total liquids production (net thousand bbls/day) 588.5 672.3
==================
(a) Includes equity affiliates 5.9 8.2
==================
Financial and Statistical Data
Preliminary
(Unaudited)
First First
Quarter Quarter
2000 1999
==================
Natural gas production (million cubic feet per day - net)
United States:
Vastar 1,054.0 1,168.0
Other U.S. 204.3 191.8
------------------
Total United States 1,258.3 1,359.8
==================
International:
United Kingdom 586.4 610.5
Indonesia 242.0 266.9
Indonesia LNG 262.0 202.6
China 107.9 91.1
Other 63.1 57.5
------------------
Total International (b) 1,261.4 1,228.6
------------------
Total natural gas production 2,519.7 2,588.4
==================
(b) Includes equity affiliates 83.5 68.2
==================
Total production (barrels of oil equivalent
- net thousands/day) 1,008.5 1,103.7
==================
Financial and Statistical Data
Preliminary
(Unaudited)
First First
Quarter Quarter
2000 1999
==================
OPERATING STATISTICS
Average sales prices
Oil and gas liquids ($ per barrel):
Alaska 20.32 6.07
Lower 48, including Vastar 23.34 9.75
U.S. composite average price 21.28 7.17
Venezuela 12.00 3.71
International composite average price 22.08 9.16
Natural gas ($ per mcf):
U.S., including Vastar 2.18 1.60
International (excluding LNG) 2.36 2.47
Indonesia LNG 4.78 2.31
REFINING AND MARKETING:
Refinery runs (net barrels per day):
Crude oil 402,500 456,700
==================
U.S. petroleum product sales volumes, including
intersegment sales (net barrels per day):
Gasoline 341,100 310,000
Jet fuels 103,900 98,500
Distillate fuels 86,900 87,900
Other 51,700 59,100
------------------
Total 583,600 555,500
==================
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