Unocal Profit Plunges 61% in 1st Quarter

Unocal reported a 61% drop in profit for the first quarter, but the decline wasn’t enough to nudge very many shareholders into the camp of an investment analyst who wants to break up the company.

The first formal test in an effort to break up half a dozen large oil companies was rebuffed Monday, as expected, by Unocal shareholders at a low-key annual meeting at the firm’s Los Angeles headquarters.

Kurt H. Wulff, a vice president at Donaldson, Lufkin & Jenrette of New York, whose wife, Louise, sponsored the proposal on Unocal’s proxy statement, complimented Unocal for at least putting it on the ballot.

The petroleum analyst is hoping for a more receptive audience when his plan is considered at the May 8 shareholders meeting of Amerada Hess, which recently slashed its dividend and reported big losses.

Unocal remained profitable during the quarter, but Chairman Fred L. Hartley told shareholders that heavy interest costs as well as the sharp falloff in oil prices had driven down earnings to $70.2 million from the record year-earlier profit of $180.7 million.

Revenue slipped 18% to $2.3 billion.

Reiterating his warnings about the damaging long-term effects of today’s low oil prices, Hartley said Unocal has closed 425 wells, representing about 2% of the company’s domestic production, because they had become unprofitable.

He said Unocal’s top priority continues to be slashing the heavy debt that it took on when fighting a takeover attempt last year. Since a peak of $5.63 billion last October, the company has reduced its long-term debt by about $450 million, Hartley said.

Analyst Wulff, who says he is acting alone, wants to split Unocal into “about 10� separate, publicly traded companies that would be owned by Unocal shareholders. He contends that, as with several other integrated oil firms, Unocal’s assets would be more valuable separately than as a whole.

Unocal, which just last year prevailed in a costly takeover battle with oilman T. Boone Pickens Jr., calls Wulff’s idea an impractical, economically unsound proposal that would mainly benefit lawyers and investment bankers. The plan attracted just 5.3% of the votes.

“I didn’t expect much,� said Wulff, who would also like to break up Amoco, Mobil and Chevron.