SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) July 23, 2004
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UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
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(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
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(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
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(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events.
Unocal Corporation ("Unocal") announced today by press release that an
arbitration panel found it owes Agrium U.S. Inc. ("Agrium") $36 million plus $2
million in interest for underdelivery of natural gas to Agrium's fertilizer
plant in Alaska. The binding award covers deliveries under the Gas Purchase and
Sale Agreement ("GPSA") between July 2002 and April 2004. The arbitration panel
agreed with Unocal that the GPSA is a reserves-based contract. However, Unocal's
full production from dedicated properties did not meet the schedule of
deliveries as interpreted by the arbitration panel.
Unocal sold its Kenai, Alaska, fertilizer plant to Agrium in 2000. The GPSA sets
forth the terms under which Unocal sells gas to the plant.
The panel's decision laid out the methodology for determining past and future
gas delivery quantities and for calculating liquidated damages arising from
underdeliveries of gas by Unocal to the plant. The GPSA sets a cap of $50
million on liquidated damages for the life of the contract. Unocal believes the
cap will be enforceable. The sales contract runs through June 2009.
The award does not include amounts that are owed for May through July 2004, or
that may be owed from August 2004 through the end of the contract. Based on
current delivery projections from certain dedicated fields, Unocal expects to
reach the cap for liquidated damages over time.
The arbitration panel also ordered Agrium to reimburse Unocal $5 million for
excess royalties that have been paid by Unocal to the state of Alaska.
Unocal expects to record a charge in its second quarter 2004 results based on
the arbitration ruling.
Additional litigation related to the asset Purchase and Sale Agreement is
pending in California Superior Court in Los Angeles County. Trial on those
issues is expected to begin late this year.
Forward-Looking Statements
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This filing contains forward-looking statements about matters such as the amount
and timing of any future liabilities to Agrium and the ultimate outcome of
claims and proceedings involving Agrium. Although these statements are based
upon Unocal's current expectations and beliefs, they are subject to both known
and unknown risks and uncertainties that could cause actual results and outcomes
to differ materially from those described in, or implied by, the forward-looking
statements, including the decisions rendered in future court and arbitration
proceedings, the enforceability and application of contractual
limitation-of-damages provisions, the volumes of natural gas that Unocal
supplies to Agrium's fertilizer plant, future disagreements with Agrium and
other factors discussed in Unocal's 2003 Annual Report on Form 10-K, as amended,
and subsequent reports filed by Unocal with the U.S. Securities and Exchange
Commission ("SEC"). Copies of the company's SEC filings are available from the
company by calling 800-252-2233 or from the SEC by calling 800-SEC-0330. The
reports are also available on the Unocal web site, www.unocal.com. Unocal
undertakes no obligation to update the forward-looking statements in this filing
to reflect future events or circumstances. All such statements are expressly
qualified in their entirety by this cautionary statement.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNOCAL CORPORATION
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(Registrant)
Date: July 23, 2004 By: /s/ Joe D. Cecil
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Joe D. Cecil
Vice President and Comptroller