Unocal to Write Off $500 Million; Move Puts It in the Red : Energy: Charge reflects lower values for fields and an ongoing reorganization. Analysts call the move a positive one.

In a move that will plunge the company into the red this year, Unocal Corp. said Monday that it will write off nearly $500 million after taxes to reflect lower values for gas and oil fields and larger-than-expected environmental cleanup costs.

The big fourth-quarter charge reflects an ongoing reorganization at the Los Angeles-based energy company, which is cutting operating costs and trimming money-losing operations, industry analysts said. The charge includes, for example, $15 million to cover a 40% reduction in corporate staff announced last month. The cuts will eliminate about 630 jobs over two years.

“It is part and parcel of the broad changes going on” at Unocal, said energy analyst Eugene L. Nowak at Dean Witter in New York. “It’s a realistic adjustment to what’s happening. It should be viewed as a positive.”

Unocal and analysts said the oil and gas write-off is primarily an accounting change that will have no cash impact. The lower values of some domestic natural gas and oil fields will actually reduce Unocal’s depreciation expenses by about $70 million, the company said.

About $275 million of the after-tax charge comes from a change in the way the company values its oil and natural gas reserves. Instead of putting a value on all Unocal properties in one country, the company broke the value down on a field-by-field basis to get a more accurate look at the performance of its holdings, spokesman Barry Lane said.

Many fields whose value was reduced are located in the Central United States, including Texas and Louisiana. Oil fields off the California coast are also included.

The company also wrote down $22 million after taxes on non-oil and gas properties.

Lane said the revaluation of property values was not related to any other changes at the company. But Nowak at Dean Witter said the field write-offs could be a prelude to their possible sale. Several big oil companies have been selling their U.S. oil fields in favor of overseas holdings.

“They will be selling a lot of properties,” Nowak said. “They will try to focus on profitable products.”

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Unocal said it will also add between $93 million and $155 million after taxes to reserves earmarked for environmental cleanup after discovering that the costs of cleaning up properties either closed or sold were higher than expected.

In addition, the company expects to record a $22-million after-tax charge for litigation expenses. Lane said the increase is not related to a particular case.