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TEXACO CEO KINNEAR HIGHLIGHTS COMPANY'S SOLID PERFORMANCE IN DIFFICULT BUSINESS CONDITIONS; SOUND BUSINESS STRATEGY IS KEY TO COMPANY'S HEALTH

TEXACO CEO KINNEAR HIGHLIGHTS COMPANY'S SOLID PERFORMANCE IN DIFFICULT BUSINESS CONDITIONS; SOUND BUSINESS STRATEGY IS KEY TO COMPANY'S HEALTH
 ORLANDO, Fla., May 12 /PRNewswire/ -- Despite a difficult economic environment, Texaco Inc. (NYSE: TX) produced solid financial results last year and is well-positioned financially, competitively and technologically for the years ahead, President and Chief Executive Officer James W. Kinnear told stockholders here today at the company's 91st annual meeting.
 "We've made major progress in these past five years," said Kinnear. "Today, Texaco is lean, competitive and in sound financial shape. We're building vigorously for Texaco's future success."
 Kinnear noted that the company has balanced its investment portfolio, maintained a strong balance sheet, and curtailed expenses. In 1992, closely managed costs and expenses, coupled with a reduction in capital expenditures, are expected to produce cash savings of some $500 million.
 According to the Texaco CEO, the company continued to improve its competitive position. Over the past five years, among the nine major integrated oil companies with whom Texaco is ranked:
 -- It is a leader in total return to stockholders, with a return of 139 percent, which translates into a compounded return of more than 19 percent per year.
 -- Its reserve replacement, finding costs, reserve addition value, and unit profitability have made it a leader in the U.S. oil industry.
 Over the same five years, the company has shown a steady increase in capital expenditures as a percent of depreciation, depletion and amortization, with a rate of more than 150 percent in 1991.
 Texaco Chairman Alfred C. DeCrane Jr. underscored Texaco's drive to continue to add value for stockholders, noting that, despite the tightened restraints on expenses, the company's multibillion-dollar, focused investment plans promise solid future contributions to a healthy, profitable Texaco.
 In addition, DeCrane said Texaco's vigorous expense controls and investment reviews will help the company avoid the "slash and burn" approach some companies have had to adopt to deal with the current squeeze on petroleum industry profitability.
 Texaco's 1992 capital budget of some $3.5 billion includes selective, judicious investments, such as: the application of enhanced oil recovery technologies in Texas and Indonesia, subsea oil development in the U.K. North Sea, a rank wildcat oil discovery in the offshore frontier area of Malaysia and the resumption of oil production in the Partitioned Neutral Zone between Kuwait and Saudi Arabia. Balancing the frontier exploration risks, according to DeCrane, were 100 low-risk drilling successes in the United States alone last year. Downstream, the company continues an ambitious program of upgrading and maintaining its refining system in the United States and abroad.
 Equally important to the company's future is Texaco's application of new technologies, such as 3-D seismic imaging, infra-red imaging from orbiting satellites and horizontal drilling techniques. Generally established technologies such as cogeneration and gasification are important to Texaco's current profitability as well as its future growth, according to DeCrane.
 "We have the resources, in plants, in equipment, in technology, in reserves of oil and natural gas, and, most important of all, in dedicated personnel and in leadership, to capitalize on today's opportunities -- and to prepare to seize tomorrow's opportunities, wherever they may occur," he said.
 Challenges Ahead
 CEO Kinnear noted that, as Texaco celebrates its 90th anniversary during 1992, it is a far different company than it was in 1902. Although, Kinnear pointed out, "The qualities that made the company successful have not changed: competitiveness, a willingness to innovate and take prudent risks and an emphasis on technology. Today's Texaco, like the Texaco of 1902, is operating in a period of fundamental change. We live in a world where we must make hard choices as to what we as a nation can, and cannot do."
 Kinnear maintained that those choices must be based on good science, cost-benefit analyses, and most of all, realism. "For us at Texaco, the operating change is most evident in the flood of environmental regulations that have been imposed on our industry in recent years," he said. Many of the regulations have come with little regard for their cost, need or effectiveness and with no calculation of their impact on the economy, Kinnear asserted.
 Kinnear said the Environmental Protection Agency (EPA) estimates that nationwide, the cost of environmental regulation is more than $125 billion a year and that by the year 2000, when all existing environmental legislation is implemented, it will reach almost $200 billion annually.
 "Too often, we end up spending enormous sums for a cure-all that cures nothing," Kinnear said.
 At least partly as a result of runaway environmental regulation, Kinnear said, the U.S. oil industry has lost 40 percent of its jobs in the last 10 years; the number of wells drilled in the United States is the lowest on record; and the nation is importing half of the oil it uses, which has profound implications for the trade deficit and even national security. In 1992, Texaco will spend $700 million on environmental programs; a significant amount when compared to this year's capital budget.
 Kinnear said that, regardless of the outcome of the pending implementation of the new Federal Clean Air Act Amendments, Texaco is fully prepared and well-positioned to meet demands for any kind of gasoline or additives that might be required. The Texaco CEO mentioned that a major new plant investment at Port Neches, Texas, where Texaco Chemical Company will produce roughly 14,000 barrels a day of methyl tertiary butyl ether (MTBE), will help Texaco and its Star Enterprise affiliate meet future environmental mandates.
 Highlighting opportunities for Texaco's future success, Kinnear noted the company's plans for investing roughly $20 billion over the next five years in promising projects around the world in exploration, production, refining and marketing.
 "Meanwhile," Kinnear said, "despite the worldwide economic situation, we're not waiting for a recovery to come to us. We're taking the initiative. Texaco can make money in good times and bad. And we're doing just that."
 -0- 5/12/92
 /CONTACT: Anita Larsen or Jim Swords, 407-351-4871, or Margaret Flesher, 914-253-6068, or Cynthia Boyd, 914-253-4743, all of Texaco/
 (TX) CO: Texaco Inc. ST: New York IN: OIL SU:


CK -- NY055 -- 9067 05/12/92 11:14 EDT
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Date:May 12, 1992
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