Texaco to Sell Many U.S. Fields, Slash Jobs : Energy: The plan reflects the oil industry’s shifting emphasis from domestic to foreign operations.

From Reuters

Texaco Inc. said Tuesday that it will streamline its operations by selling or trading off about half its producing oil fields in the United States and eliminating 2,500 more jobs over the next 12 months.

The moves, expected to reduce costs by about $300 million and boost efficiency by dropping unneeded supervisory positions, will result in a $165-million charge against second-quarter earnings, the company said.

“Future activities will be focused on those remaining core U.S. oil and gas assets, which account for more than 90% of the profits, cash flow, production and reserve base in the U.S.,” Texaco Chairman and Chief Executive Alfred DeCrane said in a statement.


Texaco’s U.S. fields, which number more than 600, accounted for 58% of the company’s 728,000-barrels-a-day crude oil production last year and 88% of the 1.97 million cubic feet of natural gas it pumped daily, according to the Value Line Investment Survey.

The company said the streamlining program will involve its oil and gas production, transportation, refining and marketing operations both in the United States and abroad.

DeCrane said the savings expected to be realized will be redirected to growth markets in the United States and abroad.

The company “is trying to show investors (that Texaco) can do more” in the way of cost cutting, said William Randol of Salomon Bros.

“The pressure is coming from Wall Street,” said Rasario Ilacqua of Rothschild Inc.

Texaco’s move reflects a trend among U.S. oil companies toward emphasizing foreign operations, where opportunities to expand sales and make new oil finds are considered better.

A week ago, Los Angeles-based Unocal Corp. said it was considering selling its producing properties in California so it could better pursue projects in Asia and other regions.


Unocal said it was engaged in discussions involving its interests in 69 oil and gas fields, including 10 producing platforms off the California coast.

Texaco’s willingness to sell marginal U.S. oil and natural gas fields is its reaction to a problem “endemic in the entire industry”: that of getting a better return from exploration and production investments, according to Ilacqua.

He said he expects to see Texaco and the major oil companies “invest in opportunities overseas that are more attractive” than those in the United States.

Through consolidations and other moves in the past two years, Texaco’s work force has been cut more than 13%, to about 38,000 employees. The figure excludes reductions related to sales of assets such as Texaco Chemical Co., which was acquired by the Huntsman organization in April.

The planned payroll cut will be accomplished through attrition, retirements and layoffs, the White Plains, N.Y.-based company said, adding that where possible, it will reassign employees.

In its U.S. refining and marketing operations, Texaco said it will consolidate units, eliminate layers of management and cut administrative and support costs more than 20%. The company said it is already streamlining its refining and marketing operations in Europe and Latin America.


Texaco also said it is receiving bids for its interests in refining and marketing operations in Nigeria and other West African countries.

Texaco’s stock rose 75 cents to close at $60.875 a share Tuesday on the New York Stock Exchange.