Unocal sees production, earnings growth from global E&P projects

US oil company Unocal Corporation said on Wednesday it expected significant growth in production, earnings and cash flow over the next five years from crude oil and natural gas development projects that have been sanctioned or expected to be approved soon, the company told financial analysts.

Speaking at Unocal's analyst meeting, Charles R. Williamson, Unocal chairman and chief executive officer, said the company's growth will come by delivering major new production projects on time and advancing the next tier of development projects. "The foundation of our forecast is a portfolio of projects with proven resources and markets," Williamson said.

"We have a strategy to accomplish these financial objectives," Williamson said. "First, we are looking to enhance the company's legacy asset production and profitability from North America, Thailand and the Indonesia shelf."

Second, Williamson said, is a string of major production projects that are slated to come on line over the next five years and other projects throughout the company's global operations arena that Unocal is expected to sanction in 2003 and beyond.

Currently sanctioned projects include West Seno Phases One and Two in Makassar Strait, AIOC Phases One and Two, Mad Dog (Gulf of Mexico) and South Kenai (Alaska) gas. The company expects to make sanction decisions on AIOC Phase Three, Ranggas and Merah Besar in Indonesia, K2 and Trident in the deepwater Gulf of Mexico, and Arthit in Thailand.

"Supplementing the development projects, we expect to make new discoveries with high-impact exploration in the deepwater Indonesia and Gulf of Mexico, as well as the deep gas in the Gulf and onshore," Williamson said. "At the same time, we will work to expand our long-term Asia gas position in Indonesia, Thailand, Vietnam and Bangladesh."

Unocal told analysts it expects to keep its overall capital spending in 2003 about even with the 2002 level. The expected spending level is $1.7 billion.

"We see a ramp-up of spending on large, high-impact development projects, while reducing spending on the smaller scale development and exploitation projects," Williamson said, "while maintaining or reducing exploration capital spending."

Capital spending for large developments project, including deepwater Indonesia and Gulf of Mexico and the Caspian development and pipeline should total about $700 million next year, up from $430 million.

Other E&P development capital would be reduced to about $600 million, compared with $815 million in 2002.

The company is forecasting exploration capital spending in 2003 at $300 million, down from an expected $370 million this year. (alex)