Union Pacific Corp. Subsidiaries

Union Pacific Resources Group Inc., a Utah corporation (the "Company"), is engaged primarily in the exploration for and the development and production of natural gas, natural gas liquids and crude oil in several major producing basins in the United States and Canada. The Company emphasizes natural gas in its exploration and production activities and also owns and operates significant assets, in proximity to its principal producing properties, dedicated to "gas value chain" activities, which consist of the gathering, processing, transportation and marketing of natural gas and natural gas liquids. The Company, through its wholly owned subsidiary, Union Pacific Fuels, Inc. ("UP Fuels"), markets approximately 72% of the Company's natural gas, 88% of its crude oil and 96% of its natural gas liquids, together with significant volumes of natural gas, natural gas liquids and crude oil produced by others. In addition, the Company engages in the hard minerals business through non-operated joint venture and royalty interests in several coal and trona (natural soda ash) mines located on lands within and adjacent to its Land Grant holdings in Wyoming. Over 90% of the Company's revenues, assets and reserves are generated or located in the United States.

In October 1995, the Company sold 42.5 million shares of its common stock in an initial public offering (the "Offering"). The Company's stock is traded on the New York Stock Exchange under the symbol "UPR." Prior to completion of the Offering, the Company was wholly owned by Union Pacific Corporation, a Utah corporation ("UPC"). Upon completion of the Offering and until October 15, 1996, UPC owned approximately 83% of the Company's outstanding common stock. Concurrent with the Offering, UPC announced its intention to distribute its remaining ownership interest in the Company to its shareholders as a dividend by means of a tax-free distribution (the "Distribution"). On October 15, 1996, the Distribution was consummated.

UPC acquired Champlin Petroleum Company ("Champlin") in 1970 to manage the exploitation of its oil and gas operations on the Land Grant. The Land Grant consists of land granted by the Federal government to a predecessor of UPC in the mid-1800s which passes through the states of Colorado and Wyoming and into Utah and intersects several highly productive oil and gas basins. In the Land Grant Area, the Company has fee ownership of the mineral rights under approximately 7.9 million acres constituting the initial Land Grant and controls the mineral rights under approximately 700,000 additional acres. In 1971, UPC combined its own oil and gas operations with those of Champlin. In 1987, the Champlin name was changed to Union Pacific Resources Company ("UPRC") and UPRC also became responsible for managing UPC's hard mineral assets.

At the beginning of 1998, the business functions of UPR were divided into what were called business units. Those business units organized into the separate areas of "Exploration and Production," "Minerals," and the "GPM Business" (for Gathering, Processing and Marketing). The GPM Business was also commonly referred to as UP Fuels, and included virtually all of the gas gathering, processing and marketing assets of UPR. At that time, UP Fuels was the seventh largest processor of natural gas in the United States, and owned or managed interests in twenty natural gas processing facilities located in six different states. This processing capacity was supported by more than four thousand miles of gathering pipelines. UP Fuels also owned or managed interests in a number of natural gas liquids fractionation plants and pipelines. UP Fuels was one of the leading United States marketers of both natural gas and natural gas liquids. As the marketing entity for UPR's natural gas and natural gas liquids, UP Fuels was a party to thousands of marketing and transportation contracts directly pertaining to the GPM Business.

In April of 1998, the UPR Board of Directors approved a deleveraging plan which included a recommendation to sell the GPM Business. This plan was announced to the public on April 27, 1998. Accordingly, UPR decided to sell UP Fuels as a separate corporate unit and to reorganize its business structure and place all GPM Business assets under one company to conform actual ownership with business operations. This reorganization ultimately resulted in all GPM assets being placed under the corporate umbrella of Union Pacific Fuels, Inc.

In June and July 1998, UPR began to seek buyers for the UP Fuels and sought bids for the stock of the entity which would ultimately hold the UP Fuels assets. On November 20, 1998, UPR agreed to sell Union Pacific Fuels, Inc., to Duke Energy Field Services, Inc.

One that has found trouble is the largest driller in the country, Union Pacific Resources. A spin-off from railroad titan Union Pacific, the stock has been a real train wreck over the past two years (1997-1999), falling from above $31 a share in early 1997 to around $9 a share as of this writing (in 1999).

To stimulate railroad growth in the West, the Pacific Railroad Act of 1862 granted large chunks of western land for those attempting to lay railroad tracks across the continent. Union Pacific, the Goliath of railroading west of the Mississippi, was given 7.9 million acres in Colorado, Utah, and Wyoming. It wasn't until a good 50 years later that Union Pacific started to mine this land for oil, gas, and coal in earnest.

After growing the business both organically and through several acquisitions, Union Pacific found itself a major player in the natural resources market. In 1995, the railroad packaged together and spun off to shareholders all of its assets in gas and natural resources as Union Pacific Resources.

After Union Pacific Resources found itself independent of the railroad, it went about looking for acquisitions. Its first major deal, a hostile offer for Pennzoil at more than double today's prices, was derailed at the last moment in 1997. Still hungry for mergers and acquisitions, the company successfully bought Canada-based Norcen for $3.5 billion last year. Late in 1998, Union Pacific Resources decided to sell its midstream gas processing operations to Duke Energy for $1.35 billion to pare down debt and concentrate on upstream gas exploration. The company is now one of the largest gas exploration companies on the continent.

Union Pacific Resources is a member of the S&P 500 index.

The Asian economic crisis, which started in late 1997, caused a drop-off in demand for oil that didn't really get felt in the market until mid-1998. Mix in this reduced demand with supply gushing in at record highs both domestically and from OPEC, and it only makes sense that prices have fallen across the board.

One warning sign with Union Pacific Resources that maybe should not have been overlooked was the company's excessively high level of debt (long-term debt to equity stands at a tall 2.8x). While the exploration activities can be shaved and operational costs trimmed during times of weak prices, debt represents a large fixed cost that has to be paid no matter what the market conditions. Debt alone is no reason to sell a company that has as many hard assets as Union Pacific Resources, but it does reduce the margin of error for equity investors.

The company's fortunes are tied intimately to oil and gas prices and, to truly know where Union Pacific Resources is headed, one has to know where the commodity markets are going. Just as the company's profits and margins have shrunk with the gas market, they are likely to rebound sharply if the price of gas bounces.

Union Pacific Resources is also in the midst of deleveraging itself by selling off non-core assets. The sale of the company's gas processing businesses to Duke Energy is in sync with this strategy, and more sales are expected to close in the near future. What should emerge is a company with greater financial flexibility that is concentrated in the business it knows best -- finding and drilling for natural gas.

DENVER (Feb. 22, 1999) -- The Federal Trade Commission has cleared the previously announced sale of Union Pacific Resources' (UPR) midstream natural gas business to Duke Energy Field Services Inc.

Duke Energy and UPR announced the $1.35 billion purchase/sale agreement Nov. 22, 1998. With the recent expiration of the waiting period required by the Hart-Scott-Rodino Antitrust Improvements Act, the parties expect the deal to close March 31.

Under the agreement, Duke Energy will purchase UPR's natural gas gathering, processing, fractionation and natural gas liquids pipeline business as well as UPR's natural gas and natural gas liquids marketing activities. Combined with current assets, these assets will make Duke Energy the nation's largest producer of natural gas liquids with production in excess of 200,000 barrels per day.

Union Pacific Resources is one of the nation's largest independent oil and gas exploration and production companies. Based in Fort Worth, Texas, UPR has been the number one domestic driller for the past seven years and was the number one gas producer in the state of Texas in 1997.

Anadarko is one of the largest independent oil and gas exploration companies in the United States and holds over 1.2 million acres of oil and gas leases and operates over 4000 CBM wells in the Powder River Basin through a wholly owned subsidiary, Lance Oil and Gas Company. In addition, we are the operator of the Atlantic Rim Field (a coal bed methane gas field) located near Rawlins, Wyoming. The Atlantic Rim Field is located near an area often referred to as the "UPRR Land Grant" or the "checker board", an area where Anadarko is owner of significant coal deposits. This ownership resulted from Anadarko's acquisition of Union Pacific Resources Corporation in 2000, whereby Anadarko acquired significant surface and mineral interests in the Land Grant which is almost 700 miles long and 40 miles wide. Anadarko now owns nearly 8 million acres of sub surface minerals through the Land Grant of which over 4 million sub surface mineral acres are located in Wyoming. (Anadarko Petroleum, "Scoping Comments for BLM's EA Preparation on the Rough Draw Project, WYW-168317," January 16, 2012, filed with Bureau of Land Management)

Overnite Corporation is a leading interstate trucking company serving all 50 states, Canada, Mexico, Puerto Rico, and the U.S. Virgin Islands. It transports a variety of products including machinery, tobacco, textiles, plastics, electronics, and paper products. The company garners over 90 percent of revenues from its less-than-truckload (LTL) business; in an LTL shipment, Overnite fills its truck with freight from several different shippers. Its fleet includes 19,480 trailers, 5,299 tractors, and 114 straight trucks. The Overnite Trucking Corporation was acquired by Union Pacific Corporation in 1987, and Union Pacific set up Overnite Corporation as the holding company for Overnite Trucking and Motor Cargo Industries. Refocusing on its core rail business, Union Pacific spun off its Overnite trucking subsidiary in an initial public offering (IPO) in 2003.

Overnite was sold to Union Pacific Corporation for $1.2 billion, the largest amount ever paid for a trucking company. Union Pacific had made the purchase to combine Overnite's 4,000 trucks with its trailer-carrying railroad flatcars in a nationwide network. In 1993 Overnite established a special truck-rail division to link Canada and Mexico with the United States. Ford and Chrysler auto parts already had been moving in both directions in 48-foot containers trucked by Overnite and carried on double-stack Union Pacific trains. (FundingUniverse.com - Overnite Company)