Chevron’s Changes Stress Focus on West : Marketing: The oil company will sell two refineries and scores of service stations east of the Rocky Mountains.
Chevron Corp., continuing a long-running overhaul aimed at making the company smaller and more efficient, announced plans Thursday to sell two refineries and scores of service stations east of the Rocky Mountains and focus its marketing efforts in the West, Southwest and South.
Noting that it anticipates very slow growth in demand for fuel products, Chevron said it wants to sell refineries in Philadelphia and Port Arthur, Tex. Between them, the refineries employ 1,800 people and can process 250,000 barrels of oil a day.
The steps announced Thursday are expected to result in a one-time charge of $550 million against the San Francisco-based oil giant’s after-tax earnings for the second quarter, which ends June 30.
The restructuring plan went over well on Wall Street, with the company’s stock rising $3.75 a share, to $88.625, in New York Stock Exchange trading.
“It makes perfect sense,” said Morris J. Greenberg, vice president of energy services at WEFA Group, a forecasting firm in Bala Cynwyd, Pa. “The returns were not adequate, and, given future expenses, the best thing was to pare down.”
Chevron, the nation’s third-largest oil company, said it will concentrate its marketing efforts east of the Rockies on the stations it owns or leases in the Gulf Coast states of Alabama, Florida, Georgia, Louisiana, Mississippi and Texas, where it has a strong share of the market.
In other states, Chevron plans to sell to wholesalers more than 175 stations that it owns or leases. The wholesalers would continue to market Chevron brands. Those states include South and North Carolina, West Virginia, Virginia, Maryland, Ohio and most of Kentucky and Tennessee.
The changes will be most obvious to consumers in Arkansas, western Kentucky and western Tennessee, where Chevron will stop selling fuel at the end of the year.
Chevron and other oil companies have been taking such steps to concentrate their strength and become more profitable.
Last year, Chevron whittled its work force by 6,200, including 4,400 who left under a special severance offer. The company will reduce its work force by another 1,200 people by June 30. At the end of 1992, the company had a total of 49,245 employees worldwide.
Chevron has also been paring operations unrelated to its core business. Earlier this month, Chevron completed the $400-million sale to Monsanto Co. of its Ortho consumer products division, which sells lawn and garden products. The company also has gotten out of the fertilizer, agricultural chemical and geothermal businesses, sold most of its mining operations and unloaded a winery.
Mike Libbey, a Chevron spokesman, said selling the refineries should save “many hundreds of millions of dollars” that the company would have been forced to spend to meet environmental standards and to modernize the facilities.
James N. Sullivan, a Chevron vice chairman, acknowledged that the company “can’t walk away from environmental responsibilities,” but said it would be willing to negotiate the point with potential buyers.
