Chevron to Cut Jobs, Sell Sites, Combine Offices
Stepping up its restructuring efforts in North America, ChevronTexaco Corp. said late Monday that it would consolidate some offices in Houston, cut as many as 200 jobs and sell hundreds of additional declining oil and natural gas properties in 15 states and the Gulf of Mexico.
The company, based in San Ramon, Calif., said it also would consider offers for certain Canadian assets, including mature oil and gas fields and facilities for processing and distributing natural gas, ChevronTexaco spokesman Stan Luckoski said Tuesday.
ChevronTexaco hasn’t committed to selling additional sites in Canada, but Luckoski said the company believed that “with the strong market” for oil and natural gas in Canada at this time, “they may prove to be worth considerably more to other investors.”
The divestiture plan, unveiled late Monday, includes about 700 U.S. oil and natural gas fields that together yield the equivalent of 48,000 barrels of oil a day, Luckoski said. About 400 other North American production sites are to be sold under divestiture plans announced in April and August.
“These efforts are part of our strategy to maximize and grow the value of our base business,” said Ray Wilcox, vice president of ChevronTexaco. “We expect to retain nearly all of our current earnings, cash flow and resource base, and to improve our overall competitiveness.”
Wilcox said the newest properties on the auction block represented more than 60% of the company’s inventory of U.S. production sites but provided only about 5% of the firm’s nationwide daily production.
Luckoski added that most of the affected properties -- including a few sites in the San Joaquin Valley -- were not operated by ChevronTexaco and provided only royalties.
ChevronTexaco also said it would consolidate offices by moving some operations to Houston from Midland, Texas, and New Orleans. The company said the sales and operations changes would force the elimination of as many as 200 jobs.
The new moves will trigger a charge against ChevronTexaco’s fourth-quarter earnings, reflecting layoff costs and write-downs on the value of the assets put up for sale. The company did not specify the amount of the expected write-downs and charges, but said they “are not expected to be material.”
In August, ChevronTexaco told Wall Street analysts it would sell off about $6 billion in assets over the next few years. So far, it has sold operations in Papua New Guinea and its El Paso refinery. Including Monday’s divestiture list, the company has tagged 1,100 oil and natural gas fields for sale, but it’s unclear how many of those already have been sold.
Jacques Rousseau, who follows ChevronTexaco for Friedman Billings Ramsey & Co., said the company might be slowing the pace of sales to take advantage of this year’s higher prices for oil and natural gas. Buyers typically don’t pay more for assets because of a temporary uptick in commodity prices, he said, so ChevronTexaco was “in no hurry to get rid of these assets.”
ChevronTexaco shares rose 27 cents Tuesday to $78.88 on the New York Stock Exchange.
