A01-98-0020 Full

A01-98-0020
Financial Analysis of Energy Firms

Amerada Hess Corporation, Mobil Corporation, Pennzoil Company, and Unocal Corpo-
ration are four energy companies headquartered in the United States. The four firms have
some characteristics in common. Amerada Hess, Mobil and Pennzoil are classified as being
involved in petroleum refining [Standard Industrial Classification, SIC 2911] while Unocal
is classified as involved in crude petroleum and natural gas [SIC 1311]. The firms are all
involved in the exploration and production phase of the energy business. The firms differ in
their involvement in downstream activities. For example, Mobil has been a major player in
the retail marketing of gasoline both in Europe and in North America while Amerada Hess
has been a significant retail marketer on the East Coast. Unocal shifted its focus from
refining and marketing to exploration and production. Pennzoil has had only a modest
retail gasoline marketing position. The firms also differ in terms of size. For example, rev-
enues in 1997 ranged from $64.3 billion for Mobil to $2.5 billion for Pennzoil.
Company Backgrounds
Amerada Hess Corporation (NYSE: AHC), incorporated in 1920 as Amerada Corp., re-
sulted from the merger with Hess Oil & Chemical Corp. in 1969. In 1989, the company
acquired oil and gas properties from TXP Operating Company, a Texas limited partnership
affiliated with Transco Energy Company, for $865.6 million. In 1990, the company formed
a joint venture with the government of the West African Republic of Gabon to develop the
Rabi-Kounga oil field at a cost of $300 million. At the end of 1997, the company was a
major integrated oil company with 595 million barrels of proved crude oil and natural gas
liquid reserves and 1.935 trillion cubic ft. of proved natural gas reserves.
The company’s exploration and production activities were located primarily in the
United States, United Kingdom, Gabon, and Norway. The company also conducted explo-
ration and/or production activities in Denmark, Indonesia, Thailand and other parts of the
world. Of the company’s proved reserves, 34% were located in the United States and 60%
were located in the United Kingdom, and the Norwegian and Danish sectors of the North
Sea. In 1997, the company refined more than 411,000 barrels a day and sold gasoline in
over 638 HESS stations, mainly in New York, New Jersey and Florida. The company’s St.
Croix, Virgin Islands refinery was one of the world’s largest. In early 1998, Amerada an-
Copyright © 1998 Thunderbird, The American Graduate School of International Management. All rights reserved.
This case was prepared by Professor Graeme Rankine for the purpose of classroom discussion only, and not to indicate
either effective or ineffective management. The data used in this case was obtained from, and used with permission of,
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Standard & Poor’s Compustat, Englewood, Colorado.
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nounced a joint venture with Petroleos de Venezuela, S.A. (PDVSA) to operate the St Croix
refinery. Under the terms of the agreement, PDVSA acquired a 50% interest in the refinery
for $625 million. Amerada Hess’s web page on the Internet was located at www.hess.com.
Mobil Corporation (NYSE: MOB) was incorporated in New York in 1882 as Stan-
dard Oil Company of New York. The company’s name was changed to Socony-Vacuum
Corporation in 1931, to Socony Mobil Oil Company, Inc. in 1955 and to Mobil Oil
Corporation in 1966. In 1988, the company sold Montgomery Ward & Company for $1.6
billion in cash to an investor group which included its senior management, General Elec-
tric Capital Corp. and Kidder, Peabody and Company. In 1996, an Australian subsidiary,
Mobil Exploration and Producing Australia Pty Ltd, acquired Amplolex Limited, an Aus-
tralian oil and gas company, for approximately $1.4 billion. In 1996, the company also
acquired a 25% interest in the Tengiz oil field in the Republic of Kazakstan, a state of the
former Soviet Union, for $1.1 billion under terms that required an initial payment of $500
million. In 1996, Mobil announced that it and British Petroleum would pool assets with a
book value of $5 billion to create a partnership across Europe with annual sales of $20
billion.
In 1997, Mobil was one of the largest oil and petroleum companies in the world. The
company owned 23 ocean-going tankers, operated an additional 12 tankers under term
charter arrangements, and owned 15,000 retail outlets, of which 48% were located in the
United States. At the end of 1997, Mobil had reported proved reserves of 4.1 billion barrels
of oil and natural gas liquids and 17.0 trillion cu. ft. of natural gas. Mobil also operated a
fully integrated chemicals operation which produced and marketed basic petrochemicals,
selected specialty chemicals, catalysts and flexible packaging films. In 1997, Mobil’s Chair-
man reported that the new five-year goal for the company was to generate returns to share-
holders that were in the highest quartile of comparable energy companies. In order to reach
that objective, the company set new targets, using 1996 as the base year: a 10% per year
increase in operating earnings to $5 billion by the year 2001; a 14% average return on
capital employed over the period; and, a $100 stock price by 2001. To support these targets,
Mobil established goals for its operating units, including: increasing oil and gas production
by an average of at least 4% a year, replacing more than 110% of the reserves produced over
the five-year period, growing trade sales volumes in fuels and lubricants by an average of 4%
to 5% a year, and increasing chemical sales volumes by 7% a year. Mobil maintained a web
page (www.mobil.com) on the Internet.
Pennzoil Company (NYSE: PZL) was formed in 1968 through the combination of
Pennzoil Co., which was established in 1889, and United Gas Corp., which was organized
in 1930. In 1990, Pennzoil acquired an 80% interest in Jiffy Lube International, which
became a wholly-owned subsidiary in 1991. The company explores for oil and gas, refines
and sells Pennzoil motor oil, and provides oil-change services at 1,500 Jiffy Lube outlets
located throughout the United States. Pennzoil brand gasoline is marketed through 403
retail outlets located in Pennsylvania, Ohio, New York, Virginia, Tennessee and Kentucky.
In 1985, the company distributed the stock of Battle Mountain Gold Company to its
shareholders in a spinoff on a one-for-one basis. In 1985, the company was awarded $10.5
billion in damages after being scooped by Texaco in the acquisition of Getty Oil. After
Texaco entered bankruptcy protection in 1987, Pennzoil settled the dispute for $3 billion
which it received in 1988 after Texaco’s plan of reorganization was approved by the bank-
ruptcy court.
In November 1997, Union Pacific Resources Group Inc. dropped its $6.4 billion hos-
tile bid for Pennzoil. Pennzoil had previously rejected the all-cash offer of $84 per share as
inadequate. At the end of 1997, Pennzoil’s Chairman reported that the company was on
track to achieve its financial goals for the end of the decade of doubling operating income
and after-tax cash flow from operations from the 1994 levels, and reducing the adjusted
debt-to-cash flow multiples to around two times. At the end of 1997, the company had
proved oil reserves of 227 million barrels and proved natural gas reserves of 1.059 trillion
cubic ft. Pennzoil’s web page (www.pennzoil.com) was located on the Internet.
Unocal Corporation (NYSE: UCL) was originally incorporated in Califormia in 1890

as the Union Oil Company of California. In 1983, the Union Oil Company reincorpo-
rated in Delaware as a wholly-owned subsidiary of the company. In 1996, the company
sold its California crude oil and natural gas assets to Nuevo Energy Company of Houston,
Texas for $492 million. In 1997, Unocal was a leading global resource and project develop-
ment company, with major oil and gas exploration and production activities in Asia, Latin
America and the United States Gulf of Mexico. Unocal was also the world’s leading pro-
ducer of geothermal energy; a provider of electrical power; and a manufacturer and mar-
keter of nitrogen-based fertilizers, petroleum coke, graphites and specialty minerals. In March
1997, Unocal further transitioned itself from a fully integrated oil company by completing
the sale of its West Coast refining, marketing and transportation assets to Stamford, Conn.-
based Tosco Corporation. Unocal received cash proceeds of $1.4 billion and 14,092,482
shares of Tosco common stock valued at $397 million. In May 1997, the company sold the
stock back to Tosco for $394 million (net of expenses).
The company has continued to shift its focus toward growth through higher-return
resource drilling and market-to-resource project development. To help accomplish this growth
strategy, the company acquired a number of new exploration blocks in prospective areas in
Argentina and in deepwater areas in the Gulf of Mexico and offshore Indonesia. Advanced
technology was expected to provide deepwater exploration and production opportunities
to the company that were previously uneconomic. In 1997, the company participated in its
first deepwater discovery in the Gulf of Mexico and made several discoveries confirming
significant resources in the East Kalimantan area, offshore Indonesia. The company planned
to grow through greater exploration success, increased international production, effective
cost controls and active portfolio management. To help achieve these goals, Unocal ex-
pected to focus its 1998 capital spending on the Lower 48 United States, international
operations and new ventures activities. At the end of 1997, the company had proved re-
serves of 533 million barrels of oil and 6.550 trillion cu. ft. of gas. Unocal’s web page on the
Internet was located at www.unocal.com.
A01-98-0020
EXHIBIT 1
LIQUIDITY RATIOS:
Cash & Market Sec. to Total Assets
Acid Test Ratio
Current Ratio
ASSET MANAGEMENT:
Day’s Receivable
Day’s Inventory
Asset Turnover
FINANCIAL LEVERAGE:
Debt to Total Assets
Stockholders’ Equity to Total assets
Long-term Debt to Stockholder’s Equity
Coverage Ratio (1)
Coverage Ratio (2)
PROFITABILITY:
Gross Margin Ratio
Return on Sales
Return on Assets (1)

Return on Equity
Return on Common Equity

STOCK MARKET PERFORMANCE:
Dividend Yield
Annual Common Stock Return
Market-to-Book Ratio
DUPONT ANALYSIS:
Return on Equity
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TABLE 1
($ MILLIONS)
ASSETS
Cash & Equivalents
Net Receivables
Inventories
Prepaid Expenses
Other Current Assets
Total Current Assets
Gross Plant,Property & Equipment
Accumulated Depreciation
Net Plant,Property & Equipment
Investments at Equity
Other Investments
Intangibles
Deferred Charges
Other Assets
Total Assets
LIABILITIES
Long Term Debt Due In One Year
Notes Payable
Accounts Payable
Taxes Payable
Accrued Expenses
Other Current Liabilities
Total Current Liabilities
Long Term Debt
Deferred Taxes
Investment Tax Credit
Minority Interest
Other Liabilities
Total Liabilities
EQUITY
Preferred Stock - Redeemable
Preferred Stock - Nonredeemable
Total Preferred Stock
Common Stock
Capital Surplus
Retained Earnings
Less: Treasury Stock
Common Equity
Total Equity
Total Liabilities & Equity
Common Shares Outstanding
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TABLE 2
($ MILLIONS, EXCEPT PER SHARE)
Sales
Cost of Goods Sold
Gross Profit
Selling, General, &
Administrative Expense
Operating Income Before Depreciation
Depreciation, Depletion,
& Amortization
Operating Profit
Interest Expense
Non-Operating Income/Expense
Special Items
Pretax Income
Total Income Taxes
Minority Interest
Income Before Extraordinary
Items & Discontinued Operations
Preferred Dividends
Available for Common
Savings Due to Common
Stock Equivalents
Adjusted Available for Common
Extraordinary Items
Discontinued Operations
Adjusted Net Income
Earnings Per Share (Primary) -
Excluding Extra Items & Disc Ops
Earnings Per Share (Primary) -
Including Extra Items & Disc Ops
Earnings Per Share (Fully Diluted)
Excluding Extra Items & Disc Ops
Earnings Per Share (Fully Diluted)
Including Extra Items & Disc Ops
EPS from Operations
Dividends Per Share

TABLE 3
(PERCENTAGE)
ASSETS
Cash & Equivalents
Net Receivables
Inventories
Prepaid Expenses
Other Current Assets
Total Current Assets
Gross Plant,Property & Equipment
Accumulated Depreciation
Net Plant,Property & Equipment
Investments at Equity
Other Investments
Intangibles
Deferred Charges
Other Assets
TOTAL ASSETS
LIABILITIES
Long Term Debt Due In One Year
Notes Payable
Accounts Payable
Taxes Payable
Accrued Expenses
Other Current Liabilities
Total Current Liabilities
Long Term Debt
Deferred Taxes
Investment Tax Credit
Minority Interest
Other Liabilities
TOTAL LIABILITIES
EQUITY
Preferred Stock - Redeemable
Preferred Stock - Nonredeemable
Total Preferred Stock
Common Stock
Capital Surplus
Retained Earnings
Less: Treasury Stock
Common Equity
TOTAL EQUITY
TOTAL LIABILITIES & EQUITY

TABLE 4
(PERCENTAGE)
Sales
Cost of Goods Sold
Gross Profit
Selling, General, &
Administrative Expense
Operating Income Before Deprec
Depreciation, Depletion, &
Amortization
Operating Profit
Interest Expense
Non-Operating Income/Expense
Special Items
Pretax Income
Total Income Taxes
Minority Interest
Income Before Extraordinary
Items & Discontinued Operations
Preferred Dividends
Available for Common
Savings Due to Common
Stock Equivalents
Adjusted Available for Common
Extraordinary Items
Discontinued Operations
Adjusted Net Income

TABLE 5
($ MILLIONS)
INDIRECT OPERATING ACTIVITIES

Income Before Extraordinary Items
Depreciation and Amortization
Extraordinary Items and Disc. Operations
Deferred Taxes
Equity in Net Loss (Earnings)
Sale of Property, Plant, and Equipment
and Sale of Investments - Loss (Gain)
Funds from Operations - Other
Receivables - Decrease (Increase)
Inventory - Decrease (Increase)
Accounts Payable and Accrued Liabs - Inc (Dec)
Income Taxes - Accrued - Increase (Decrease)
Other Assets and Liabilities - Net Change
Operating Activities - Net Cash Flow
INVESTING ACTIVITIES
Investments - Increase
Sale of Investments
Short-Term Investments - Change
Capital Expenditures
Sale of Property, Plant, and Equipment
Acquisitions
Investing Activities - Other
Investing Activities - Net Cash Flow
FINANCING ACTIVITIES
Sale of Common and Preferred Stock
Purchase of Common and Preferred Stock
Cash Dividends
Long-Term Debt - Issuance
Long-Term Debt - Reduction
Current Debt - Changes
Financing Activities - Other
Financing Activities - Net Cash Flow
Exchange Rate Effect
Cash and Equivalents - Change
DIRECT OPERATING ACTIVITIES
Interest Paid - Net
Income Taxes Paid

TABLE 6
Common Shares Outstanding (M)

Price per share (12/31)
Market Value of Equity ($M)
Return - Large Common Stocks

Return - Small Common Stocks
Return - Long-term Corporate Bonds
Return - US Treasury Bills

TABLE 7
LIQUIDITY RATIOS:
Cash & Market Sec to Total Assets
Acid Test Ratio
Current Ratio
ASSET MANAGEMENT:
Day’s Receivable
Day’s Inventory
Asset Turnover
FINANCIAL LEVERAGE:
Debt to Total Assets
Stockholders’ Equity to Total Assets
Long-term Debt to Stockholder’s Equity
Coverage Ratio (1)
Coverage Ratio (2)
PROFITABILITY:
Gross Margin Ratio
Return on Sales
Return on Equity
Return on Common Equity
STOCK MARKET PERFORMANCE:
Dividend Yield
Annual Common Stock Return
Market-to-Book Ratio
DUPONT ANALYSIS:
Return on Equity =
Return on Sales
* Asset Turnover
* Leverage
Unocal Corpo-
e four firms have
classified as being
911] while Unocal
The firms are all
The firms differ in
n a major player in
hile Amerada Hess
ts focus from
only a modest
For example, rev-
erada Corp., re-

9, the company
limited partnership
e company formed
bon to develop the
company was a
il and natural gas
conducted explo-
other parts of the
ed States and 60%
tors of the North
sold gasoline in
The company’s St.
98, Amerada an-
l Management. All rights reserved.

om discussion only, and not to indicate
ned from, and used with permission of,
and market information produced by
Distributed by The Case Centre North America

www.thecasecentre.org t +1 781 239 5884
All rights reserved f +1 781 239 5885
e info.usa@thecasecentre.org
operate the St Croix

rest in the refinery
at www.hess.com.
Socony-Vacuum
Company for $1.6

nt, General Elec-
alian subsidiary,
Limited, an Aus-
company also
tan, a state of the
payment of $500
pool assets with a
al sales of $20
e world. The
ers under term
re located in the
f 4.1 billion barrels
l also operated a
petrochemicals,
997, Mobil’s Chair-
te returns to share-
s. In order to reach
a 10% per year
age return on
upport these targets,
and gas production
erves produced over
by an average of 4%
il maintained a web
ch was organized
ational, which
oil and gas, refines
iffy Lube outlets
ed through 403
ssee and Kentucky.
mpany to its
was awarded $10.5
Getty Oil. After
A01-98-0020
ute for $3 billion

oved by the bank-
4 billion hos-
of $84 per share as
ompany was on
operating income
ng the adjusted
company had
s of 1.059 trillion
rmia in 1890
ny reincorpo-
6, the company
mpany of Houston,
nd project develop-
ties in Asia, Latin
ld’s leading pro-
acturer and mar-
ty minerals. In March
any by completing
o Stamford, Conn.-
and 14,092,482
company sold the
ccomplish this growth

rospective areas in
donesia. Advanced
on opportunities
participated in its
veries confirming
he company planned
duction, effective
als, Unocal ex-
international
had proved re-
al’s web page on the
Some Definitions of Key Ratios
= (Cash + Marketable Sec.) / Total Assets

= (Cash + Marketable Sec. + Receivables) / Current Liab
= Current Assets / Current Liabilities
= 365 / (Sales / Receivables)

= 365 / (Cost of Goods Sold / Inventories)
= Sales / Total Assets
= (CL + L-T Debt + Other Liabilities) / Total Assets

= Total Stockholders’ Equity / Total Assets
= (L-T Debt + Other Liabilities) / Stockholders’ Equity
= Operating Profit / Interest Expense
= (Operating CF + Interest Paid) / Interest Paid
= Gross Profit / Sales

= Net Income / Sales
(Adj. Net Income + Preferred Divs.) / Sales
= Net Income / Total Assets
(Adj. Net Income + Preferred Divs.) / Total Assets
= (Pretax Income + Interest Expense)/ Total Assets
= Net Income / Stock. Equity
(Adj. Net Income + Preferred Divs.) /Stock. Equity
= Adj. Net Income / Common Stock. Equity
= Cash Dividends / Market Price per Share (12/31)

= (Pricet + Divst - Pricet-1) / Pricet-1
= Market Price per Share / (Common Stockholders’
Equity /Common Shares Outstanding)
= Return on Sales * Asset Turnover * Leverage

= (Net Income / Sales ) * (Sales / Assets) * (Assets /
Stock. Equity)
A01-98-0020
Financial Analysis of Energy Firms—Annual Balance Sheet
AMERADA HESS CORP

Dec97 Dec96 Dec95
91.15 112.52 56.07

993.10 848.13 798.33
937.95 1,272.31 838.77
0.00 0.00 0.00
181.43 193.88 269.37
2,203.63 2,426.84 1,962.54
12,621.63 11,902.42 13,064.21
7,430.84 6,995.14 7,694.50
5,190.79 4,907.28 5,369.72
@CF @CF @CF
250.46 218.57 185.52
0.00 0.00 0.00
0.00 0.00 0.00
289.73 231.78 238.59
7,934.62 7,784.48 7,756.37
106.43 209.47 120.53

17.83 18.00 90.00
752.58 666.17 443.51
195.69 258.72 239.08
491.64 481.58 560.04
175.68 103.03 151.42
1,739.85 1,736.98 1,604.58
2,003.03 1,711.82 2,587.38
562.37 616.90 602.79
0.00 0.00 0.00
0.00 0.00 0.00
413.67 335.15 301.22
4,718.92 4,400.85 5,095.97
0.00 0.00 0.00

0.00 0.00 0.00
0.00 0.00 0.00
91.45 93.07 93.01
774.63 754.56 744.25
2,349.62 2,536.00 1,823.13
0.00 0.00 0.00
3,215.70 3,383.63 2,660.40
3,215.70 3,383.63 2,660.40
7,934.62 7,784.48 7,756.37
91.451 93.074 93.011
Sc Engineering Management, at Faculty of Engineering & Science, University of Greenwich.
Financial Analysis of Energy Firms—Annual Income Statement
AMERADA HESS CORP

Dec97 Dec96 Dec95
8,233.72 8,272.19 7,302.31
6,301.05 6,069.29 5,220.66
1,932.68 2,202.89 2,081.65
1,022.99 897.76 908.09
909.68 1,305.13 1,173.56
672.67 783.21 893.07

237.01 521.92 280.49
146.43 165.50 247.46
116.61 657.53 154.48
-80.60 @CF -540.16
126.58 1,013.94 -352.65
119.08 353.85 41.76
0.00 0.00 0.00
7.50 660.10 -394.41

0.00 0.00 0.00
7.50 660.10 -394.41
0.00 0.00 0.00

7.50 660.10 -394.41
0.00 0.00 0.00
0.00 0.00 0.00
7.50 660.10 -394.41
$0.08 $7.09 -$4.24
$0.08 $7.09 -$4.24
$0.08 $7.09 -$4.24
$0.08 $7.09 -$4.24

$0.81 $2.30 $0.04
$0.60 $0.60 $0.60
Financial Analysis of Energy Firms—Common Size Balance Sheet
AMERADA HESS CORP

Dec97 Dec96 Dec95
1.15 1.45 0.72

12.52 10.90 10.29
11.82 16.34 10.81
0.00 0.00 0.00
2.29 2.49 3.47
27.77 31.18 25.30
159.07 152.90 168.43
93.65 89.86 99.20
65.42 63.04 69.23
@CF @CF @CF
3.16 2.81 2.39
0.00 0.00 0.00
0.00 0.00 0.00
3.65 2.98 3.08
100.00 100.00 100.00
1.34 2.69 1.55

0.22 0.23 1.16
9.48 8.56 5.72
2.47 3.32 3.08
6.20 6.19 7.22
2.21 1.32 1.95
21.93 22.31 20.69
25.24 21.99 33.36
7.09 7.92 7.77
0.00 0.00 0.00
0.00 0.00 0.00
5.21 4.31 3.88
59.47 56.53 65.70
0.00 0.00 0.00

0.00 0.00 0.00
0.00 0.00 0.00
1.15 1.20 1.20
9.76 9.69 9.60
29.61 32.58 23.50
0.00 0.00 0.00
40.53 43.47 34.30
40.53 43.47 34.30
100.00 100.00 100.00
Financial Analysis of Energy Firms—Common Size Income Statement
AMERADA HESS CORP

Dec97 Dec96 Dec95
100.00 100.00 100.00
76.53 73.37 71.49
23.47 26.63 28.51
12.42 10.85 12.44

11.05 15.78 16.07
8.17 9.47 12.23

2.88 6.31 3.84
1.78 2.00 3.39
1.42 7.95 2.12
-0.98 @CF -7.40
1.54 12.26 -4.83
1.45 4.28 0.57
0.00 0.00 0.00
0.09 7.98 -5.40

0.00 0.00 0.00
0.09 7.98 -5.40
0.00 0.00 0.00

0.09 7.98 -5.40
0.00 0.00 0.00
0.00 0.00 0.00
0.09 7.98 -5.40
Financial Analysis of Energy Firms—Annual Statement of Cash Flows
AMERADA HESS CORP

Dec97 Dec96 Dec95
7.50 660.10 -394.41

901.21 947.81 1071.95
0.00 0.00 0.00
@CF @CF @CF
@CF @CF @CF
-16.46 -529.27 0.00

20.81 86.38 288.22
-148.49 -66.45 -226.79
333.48 -434.21 106.36
@CF @CF @CF
-46.63 32.62 67.23
198.60 110.74 328.46
1250.01 807.72 1241.01
0.00 0.00 31.55

0.00 0.00 0.00
0.00 0.00 0.00
1345.59 860.63 692.11
@CF @CF @CF
0.00 0.00 0.00
63.02 1037.07 177.34
-1282.57 176.45 -546.32
0.00 0.00 0.00
122.28 8.24 0.00
55.37 55.75 55.79
398.39 0.00 25.00
209.00 794.53 689.35
1.98 -72.05 26.25
0.00 0.00 0.00
13.72 -930.55 -693.90
-2.52 2.84 2.14
-21.37 56.45 2.94
146.79 176.03 254.76

259.77 294.90 101.07
Financial Analysis of Energy Firms—Miscellanceous Information

AMERADA HESS CORP
Dec97 Dec96 Dec95
91.451 93.074 93.011
$54.88 $57.88 $53.00
$5,018.83 $5,387.12 $4,929.58
% % %
33.36 23.07 37.43
22.78 17.62 34.46
12.95 1.40 27.20
5.26 5.21 5.60
Selected Ratios
AMERADA HESS
Dec97 Dec96
0.014
0.553
1.397
37.423
76.515
1.063
0.486
0.435
0.605
3.154
5.588
0.266
0.080
0.085
0.152
0.195
0.195
0.010
0.103
1.592
0.195
0.080
1.063
2.301

Rest of the world
t +44 (0)1234 750903
f +44 (0)1234 751125
e info@thecasecentre.org
/ Total Assets
Receivables) / Current Liabilities
iabilities) / Total Assets

y / Total Assets
ies) / Stockholders’ Equity
aid) / Interest Paid
d Divs.) / Sales
d Divs.) / Total Assets

Expense)/ Total Assets
d Divs.) /Stock. Equity

n Stock. Equity
Price per Share (12/31)
Common Stockholders’
urnover * Leverage
ales / Assets) * (Assets /
MOBIL CORP PENNZOIL CO UNOCAL CORP

Dec97 Dec96 Dec95 Dec97 Dec96 Dec95 Dec97 Dec96 Dec95
820.00 808.00 498.00 18.59 34.38 23.61 338.00 217.00 94.00

5,952.00 8,192.00 7,316.00 234.28 250.33 335.88 897.00 1,027.00 920.00
2,156.00 3,017.00 3,287.00 204.91 171.92 161.19 172.00 125.00 360.00
@CF @CF @CF 20.77 22.08 23.81 0.00 0.00 0.00
794.00 878.00 955.00 116.16 58.88 60.33 94.00 1,859.00 202.00
9,722.00 12,895.00 12,056.00 594.71 537.59 604.83 1,501.00 3,228.00 1,576.00
49,630.00 55,127.00 51,719.00 6,119.71 5,864.31 6,046.07 14,712.00 14,092.00 18,540.00
25,074.00 27,648.00 26,869.00 3,621.11 3,546.23 3,628.04 9,896.00 9,502.00 11,431.00
24,556.00 27,479.00 24,850.00 2,498.60 2,318.08 2,418.02 4,816.00 4,590.00 7,109.00
8,479.00 5,078.00 4,184.00 @CF @CF @CF 413.00 578.00 461.00
@CF @CF @CF 1,016.98 1,030.48 987.52 700.00 628.00 640.00
@CF @CF @CF @CF @CF @CF 0.00 0.00 0.00
@CF @CF @CF 0.00 0.00 0.00 0.00 0.00 0.00
802.00 956.00 1,048.00 295.60 238.10 297.40 100.00 99.00 105.00
43,559.00 46,408.00 42,138.00 4,405.89 4,124.25 4,307.78 7,530.00 9,123.00 9,891.00
729.00 897.00 508.00 5.56 3.56 4.31 1.00 118.00 8.00

2,265.00 2,528.00 1,619.00 0.00 0.00 468.93 0.00 0.00 0.00
4,418.00 5,935.00 5,358.00 297.20 246.28 303.79 785.00 1,012.00 804.00
1,906.00 2,615.00 2,676.00 38.91 2.81 2.49 126.00 231.00 193.00
2,794.00 2,968.00 2,703.00 57.15 56.36 59.35 54.00 70.00 92.00
309.00 305.00 190.00 87.17 83.94 79.41 194.00 191.00 219.00
12,421.00 15,248.00 13,054.00 485.99 392.95 918.27 1,160.00 1,622.00 1,316.00
3,670.00 4,450.00 4,629.00 2,264.63 2,288.26 2,112.45 2,691.00 3,462.00 3,698.00
3,535.00 3,416.00 2,647.00 288.68 241.79 227.94 137.00 348.00 722.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
381.00 46.00 95.00 @CF @CF @CF 29.00 7.00 @CF
4,091.00 4,176.00 3,762.00 228.05 232.18 212.89 1,199.00 1,409.00 1,225.00
24,098.00 27,336.00 24,187.00 3,267.35 3,155.18 3,471.54 5,216.00 6,848.00 6,961.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

336.00 321.00 311.00 0.00 0.00 0.00 0.00 0.00 513.00
336.00 321.00 311.00 0.00 0.00 0.00 0.00 0.00 513.00
894.00 891.00 888.00 43.51 43.51 43.51 252.00 251.00 247.00
1,549.00 1,468.00 1,396.00 325.46 323.21 324.81 452.00 412.00 319.00
19,840.00 19,035.00 17,718.00 1,019.49 903.03 780.85 1,972.00 1,612.00 1,851.00
3,158.00 2,643.00 2,362.00 249.92 300.67 312.94 362.00 0.00 0.00
19,125.00 18,751.00 17,640.00 1,138.54 969.08 836.23 2,314.00 2,275.00 2,417.00
19,461.00 19,072.00 17,951.00 1,138.54 969.08 836.23 2,314.00 2,275.00 2,930.00
43,559.00 46,408.00 42,138.00 4,405.89 4,124.25 4,307.78 7,530.00 9,123.00 9,891.00
783.364 787.588 789.120 47.546 46.599 46.370 242.526 250.671 247.310

58,399.00 71,129.00 64,767.00 2,511.25 2,364.73 2,385.29 5,781.00 5,101.00 7,235.00
45,775.00 57,277.00 52,003.00 1,441.63 1,473.07 1,589.05 3,570.00 2,753.00 5,116.00
12,624.00 13,852.00 12,764.00 1,069.62 891.66 796.24 2,211.00 2,348.00 2,119.00
4,856.00 5,699.00 6,115.00 455.63 393.29 439.41 410.00 407.00 635.00
7,768.00 8,153.00 6,649.00 613.99 498.37 356.82 1,801.00 1,941.00 1,484.00
2,554.00 2,725.00 3,748.00 288.85 273.94 325.12 893.00 839.00 1,022.00

5,214.00 5,428.00 2,901.00 325.14 224.43 31.70 908.00 1,102.00 462.00
428.00 455.00 514.00 176.89 188.15 198.58 251.00 304.00 326.00
1,579.00 1,138.00 2,004.00 166.14 91.15 108.93 239.00 242.00 327.00
@CF @CF @CF -10.00 41.70 -419.73 -125.00 -282.00 @CF
6,365.00 6,111.00 4,391.00 304.39 169.13 -477.67 771.00 758.00 463.00
3,093.00 3,147.00 2,015.00 124.14 35.23 -172.53 102.00 302.00 203.00
@CF @CF @CF @CF @CF @CF @CF @CF @CF
3,272.00 2,964.00 2,376.00 180.26 133.90 -305.14 669.00 456.00 260.00

52.00 54.00 56.00 0.00 0.00 0.00 0.00 18.00 36.00
3,220.00 2,910.00 2,320.00 180.26 133.90 -305.14 669.00 438.00 224.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 -54.00 0.00

3,220.00 2,910.00 2,320.00 180.26 133.90 -305.14 669.00 384.00 224.00
0.00 0.00 0.00 -5.19 0.00 0.00 -38.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 -50.00 -420.00 0.00
3,220.00 2,910.00 2,320.00 175.07 133.90 -305.14 581.00 -36.00 224.00
$4.10 $3.69 $2.93 $3.83 $2.88 -$6.60 $2.69 $1.54 $0.91
$4.10 $3.69 $2.93 $3.72 $2.88 -$6.60 $2.34 -$0.15 $0.91
$4.01 $3.61 $2.87 $3.76 $2.88 -$6.60 $2.65 $1.56 $0.98
$4.01 $3.61 $2.87 $3.65 $2.88 -$6.60 $2.31 -$0.03 $0.98

$4.30 $3.86 $3.53 $3.96 $2.33 -$0.86 $3.00 $2.68 $1.21
$2.12 $1.96 $1.81 $1.00 $1.00 $2.50 $0.80 $0.80 $0.80

1.88 1.74 1.18 0.42 0.83 0.55 4.49 2.38 0.95

13.66 17.65 17.36 5.32 6.07 7.80 11.91 11.26 9.30
4.95 6.50 7.80 4.65 4.17 3.74 2.28 1.37 3.64
@CF @CF @CF 0.47 0.54 0.55 0.00 0.00 0.00
1.82 1.89 2.27 2.64 1.43 1.40 1.25 20.38 2.04
22.32 27.79 28.61 13.50 13.03 14.04 19.93 35.38 15.93
113.94 118.79 122.74 138.90 142.19 140.35 195.38 154.47 187.44
57.56 59.58 63.76 82.19 85.98 84.22 131.42 104.15 115.57
56.37 59.21 58.97 56.71 56.21 56.13 63.96 50.31 71.87
19.47 10.94 9.93 @CF @CF @CF 5.48 6.34 4.66
@CF @CF @CF 23.08 24.99 22.92 9.30 6.88 6.47
@CF @CF @CF @CF @CF @CF 0.00 0.00 0.00
@CF @CF @CF 0.00 0.00 0.00 0.00 0.00 0.00
1.84 2.06 2.49 6.71 5.77 6.90 1.33 1.09 1.06
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
1.67 1.93 1.21 0.13 0.09 0.10 0.01 1.29 0.08

5.20 5.45 3.84 0.00 0.00 10.89 0.00 0.00 0.00
10.14 12.79 12.72 6.75 5.97 7.05 10.42 11.09 8.13
4.38 5.63 6.35 0.88 0.07 0.06 1.67 2.53 1.95
6.41 6.40 6.41 1.30 1.37 1.38 0.72 0.77 0.93
0.71 0.66 0.45 1.98 2.04 1.84 2.58 2.09 2.21
28.52 32.86 30.98 11.03 9.53 21.32 15.41 17.78 13.31
8.43 9.59 10.99 51.40 55.48 49.04 35.74 37.95 37.39
8.12 7.36 6.28 6.55 5.86 5.29 1.82 3.81 7.30
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.87 0.10 0.23 @CF @CF @CF 0.39 0.08 @CF
9.39 9.00 8.93 5.18 5.63 4.94 15.92 15.44 12.38
55.32 58.90 57.40 74.16 76.50 80.59 69.27 75.06 70.38
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.77 0.69 0.74 0.00 0.00 0.00 0.00 0.00 5.19
0.77 0.69 0.74 0.00 0.00 0.00 0.00 0.00 5.19
2.05 1.92 2.11 0.99 1.05 1.01 3.35 2.75 2.50
3.56 3.16 3.31 7.39 7.84 7.54 6.00 4.52 3.23
45.55 41.02 42.05 23.14 21.90 18.13 26.19 17.67 18.71
7.25 5.70 5.61 5.67 7.29 7.26 4.81 0.00 0.00
43.91 40.40 41.86 25.84 23.50 19.41 30.73 24.94 24.44
44.68 41.10 42.60 25.84 23.50 19.41 30.73 24.94 29.62
100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
78.38 80.53 80.29 57.41 62.29 66.62 61.75 53.97 70.71
21.62 19.47 19.71 42.59 37.71 33.38 38.25 46.03 29.29
8.32 8.01 9.44 18.14 16.63 18.42 7.09 7.98 8.78

13.30 11.46 10.27 24.45 21.08 14.96 31.15 38.05 20.51
4.37 3.83 5.79 11.50 11.58 13.63 15.45 16.45 14.13

8.93 7.63 4.48 12.95 9.49 1.33 15.71 21.60 6.39
0.73 0.64 0.79 7.04 7.96 8.33 4.34 5.96 4.51
2.70 1.60 3.09 6.62 3.85 4.57 4.13 4.74 4.52
@CF @CF @CF -0.40 1.76 -17.60 -2.16 -5.53 @CF
10.90 8.59 6.78 12.12 7.15 -20.03 13.34 14.86 6.40
5.30 4.42 3.11 4.94 1.49 -7.23 1.76 5.92 2.81
5.60 4.17 3.67 7.18 5.66 -12.79 11.57 8.94 3.59

0.09 0.08 0.09 0.00 0.00 0.00 0.00 0.35 0.50
5.51 4.09 3.58 7.18 5.66 -12.79 11.57 8.59 3.10
0.00 0.00 0.00 0.00 0.00 0.00 0.00 -1.06 0.00

5.51 4.09 3.58 7.18 5.66 -12.79 11.57 7.53 3.10
0.00 0.00 0.00 -0.21 0.00 0.00 -0.66 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 -0.86 -8.23 0.00
5.51 4.09 3.58 6.97 5.66 -12.79 10.05 -0.71 3.10

3272.00 2964.00 2376.00 180.26 133.90 -305.14 669.00 456.00 260.00

2554.00 2725.00 3748.00 320.29 285.52 336.57 1072.00 1198.00 1083.00
0.00 0.00 0.00 -5.19 0.00 0.00 45.00 323.00 0.00
404.00 446.00 -233.00 59.03 20.91 -175.45 -249.00 -332.00 9.00
-59.00 153.00 -51.00 23.46 6.84 @CF @CF @CF @CF
-389.00 -423.00 -1041.00 -78.73 -61.51 -7.74 -80.00 -77.00 -117.00

720.00 777.00 613.00 60.28 46.79 451.98 -162.00 113.00 0.00
834.00 -1199.00 -994.00 12.32 80.80 2.68 142.00 -130.00 -5.00
-17.00 91.00 -66.00 -54.45 -7.30 10.92 -60.00 10.00 -16.00
27.00 817.00 560.00 90.66 -91.25 73.72 -223.00 208.00 115.00
-300.00 -23.00 134.00 -5.49 5.96 101.45 -107.00 38.00 -33.00
-69.00 24.00 -22.00 -110.34 -10.12 -41.96 86.00 -123.00 -19.00
6977.00 6352.00 5024.00 492.08 410.55 447.04 1133.00 1684.00 1277.00
756.00 645.00 228.00 585.28 572.84 664.55 0.00 0.00 0.00

0.00 0.00 0.00 590.40 578.87 655.48 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
4689.00 4967.00 4268.00 559.47 565.62 473.36 1427.00 1398.00 1459.00
0.00 1347.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1050.00 1759.00 2034.00 65.46 492.94 151.31 1889.00 609.00 204.00
-4395.00 -5200.00 -2462.00 -488.90 -66.64 -331.13 462.00 -789.00 -1255.00
84.00 75.00 74.00 46.97 0.00 0.00 14.00 33.00 55.00
515.00 281.00 289.00 0.00 0.00 0.00 362.00 0.00 0.00
1719.00 1601.00 1490.00 47.15 46.48 115.59 199.00 226.00 233.00
1035.00 2161.00 1739.00 1675.88 1435.68 77.60 470.00 375.00 844.00
1772.00 1215.00 2585.00 1694.68 1583.66 210.91 1336.00 943.00 734.00
@CF @CF @CF @CF -139.16 131.72 @CF @CF @CF
339.00 0.00 0.00 0.00 0.49 0.00 -61.00 -11.00 -8.00
-2548.00 -861.00 -2551.00 -18.98 -333.14 -117.18 -1474.00 -772.00 -76.00
-22.00 19.00 -44.00 0.00 0.00 0.00 0.00 0.00 0.00
12.00 310.00 -33.00 -15.79 10.77 -1.27 121.00 123.00 -54.00
528.00 458.00 556.00 162.26 179.50 188.90 187.00 276.00 268.00

2687.00 2416.00 2091.00 30.63 13.40 -107.20 313.00 332.00 228.00

783.364 787.588 789.120 47.546 46.599 46.370 242.526 250.671 247.310
$72.19 $61.13 $55.80 $66.81 $56.50 $42.25 $38.81 $40.75 $29.13
$56,551.05 $48,145.26 $44,032.90 $3,176.55 $2,632.84 $1,959.13 $9,412.43 $10,214.84 $7,204.14
MOBIL PENNZOIL UNOCAL

Dec95 Dec97 Dec96 Dec95 Dec97 Dec96 Dec95 Dec97 Dec96 Dec95
0.007 0.019 0.017 0.012 0.008 0.005 0.045 0.024 0.010

0.532 0.545 0.590 0.599 0.725 0.391 1.065 0.767 0.771
1.223 0.783 0.846 0.924 1.368 0.659 1.294 1.990 1.198
39.904 37.201 42.037 41.230 38.639 51.396 56.635 73.487 46.413

58.642 17.191 19.226 23.071 42.598 37.025 17.585 16.573 25.684
0.941 1.341 1.533 1.537 0.573 0.554 0.768 0.559 0.731
0.579 0.463 0.514 0.509 0.706 0.753 0.671 0.712 0.631

0.343 0.447 0.411 0.426 0.235 0.194 0.307 0.249 0.296
1.086 0.399 0.452 0.467 2.601 2.781 1.681 2.141 1.680
1.133 12.182 11.930 5.644 1.193 0.160 3.618 3.625 1.417
5.871 14.214 14.869 10.036 3.287 3.367 7.059 7.101 5.765
0.285 0.216 0.195 0.197 0.377 0.334 0.382 0.460 0.293

-0.054 0.056 0.042 0.037 0.057 -0.128 0.101 -0.004 0.036
-0.051 0.075 0.064 0.056 0.032 -0.071 0.077 -0.002 0.026
-0.014 0.156 0.141 0.116 0.087 -0.065 0.136 0.116 0.080
-0.148 0.168 0.155 0.132 0.138 -0.365 0.251 -0.008 0.089
-0.148 0.168 0.155 0.132 0.138 -0.365 0.251 -0.016 0.093
0.011 0.029 0.032 0.032 0.018 0.059 0.021 0.020 0.027

0.174 0.216 0.129 0.370 0.361 0.014 -0.028 0.426 0.098
1.853 2.957 2.568 2.496 2.717 2.343 4.068 4.490 2.981
-0.148 0.168 0.155 0.132 0.138 -0.365 0.251 -0.008 0.089

-0.054 0.056 0.042 0.037 0.057 -0.128 0.101 -0.004 0.036
0.941 1.341 1.533 1.537 0.573 0.554 0.768 0.559 0.731
2.915 2.238 2.433 2.347 4.256 5.151 3.254 4.010 3.376

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Financial Analysis of Energy Firms

Unocal Corporation (NYSE: UCL) was originally incorporated in Califormia in 1890

Return on Assets (1)

Return on Assets (2)

Return on Common Equity

Educational material supplied by The Case Centre

Educational material supplied by The Case Centre

Educational material supplied by The Case Centre

Educational material supplied by The Case Centre

Educational material supplied by The Case Centre

INDIRECT OPERATING ACTIVITIES

Educational material supplied by The Case Centre

Common Shares Outstanding (M)

Return - Large Common Stocks

Educational material supplied by The Case Centre

erada Corp., re-

l Management. All rights reserved.

Distributed by The Case Centre North America

operate the St Croix

Company for $1.6

ute for $3 billion

ccomplish this growth

Some Definitions of Key Ratios

= (Cash + Marketable Sec.) / Total Assets

= 365 / (Sales / Receivables)

= (CL + L-T Debt + Other Liabilities) / Total Assets

= Gross Profit / Sales

= Cash Dividends / Market Price per Share (12/31)

= Return on Sales * Asset Turnover * Leverage

Financial Analysis of Energy Firms—Annual Balance Sheet

AMERADA HESS CORP

91.15 112.52 56.07

106.43 209.47 120.53

0.00 0.00 0.00

Sc Engineering Management, at Faculty of Engineering & Science, University of Greenwich.

Financial Analysis of Energy Firms—Annual Income Statement

AMERADA HESS CORP

672.67 783.21 893.07

7.50 660.10 -394.41

0.00 0.00 0.00

$0.08 $7.09 -$4.24

$0.08 $7.09 -$4.24

$0.08 $7.09 -$4.24

$0.08 $7.09 -$4.24

Sc Engineering Management, at Faculty of Engineering & Science, University of Greenwich.

Financial Analysis of Energy Firms—Common Size Balance Sheet

AMERADA HESS CORP

1.15 1.45 0.72

1.34 2.69 1.55

0.00 0.00 0.00

Sc Engineering Management, at Faculty of Engineering & Science, University of Greenwich.

Financial Analysis of Energy Firms—Common Size Income Statement

AMERADA HESS CORP

12.42 10.85 12.44

8.17 9.47 12.23

0.09 7.98 -5.40

0.00 0.00 0.00

Sc Engineering Management, at Faculty of Engineering & Science, University of Greenwich.

Financial Analysis of Energy Firms—Annual Statement of Cash Flows

AMERADA HESS CORP

7.50 660.10 -394.41

-16.46 -529.27 0.00