Unocal Earnings Jump Sharply in 4th Quarter, Year

Unocal reported sharply higher earnings for the October-December quarter on Monday and said that stronger profits in its oil refining and marketing business more than offset a steep fall in the performance of its crude oil production and exploration division.

The company said net income for the fourth quarter jumped more than fourfold to $141 million, compared to just $29 million a year earlier. For the year, net profit more than doubled to $480 million from $181 million the previous year.

In both periods, however, the results were inflated by accounting changes, tax refunds and the sale of assets, the Los Angeles-based energy company said.

Repeating a pattern seen throughout the oil industry, Unocal said low prices for crude oil had depressed profits from the production and sale of crude oil. But this boosted profit margins on the other half of its oil business, refining and marketing.

The company said full-year earnings from oil exploration and production slipped 15% to $325 million. For the fourth quarter, those operations earned $38 million, off about 40%.

The refining and marketing division, benefiting from the lower prices it paid for crude oil to feed into its refineries, posted a fourfold rise in fourth-quarter earnings to $58 million. For the year, earnings surged to $182 million from $42 million.

Would Still Double

Unocal said a change in the accounting principle for income taxes contributed a $456-million gain in the full-year profit. This was partly offset by the previously reported writedown of $341 million in the value of its controversial Colorado oil shale project.

Without those factors, Unocal said its full-year profit was $365 million, about double the previous year’s showing.

However, the 1988 results also included the bottom-line effects of the sale of its downtown Los Angeles headquarters, an after-tax gain of $98 million. Unocal said it also received a $33-million refund for overpayment of the windfall profit tax and a $13-million gain from the settlement of a pension matter.

Richard J. Stegemeier, Unocal’s president and chief executive, said the company reduced its debt an additional $389 million during the year. Total debt on Dec. 31 stood at $4.6 billion, compared to a high of $6.1 billion in 1985, a debt load taken on when Unocal fought off a takeover attempt by oilman T. Boone Pickens Jr.