TEXACO MANAGEMENT REPORTS ON COMPANY'S PROGRESS IN IMPLEMENTING ENHANCED PLAN FOR GROWTH.
According to DeCrane, swift execution of the key action steps outlined in Texaco's business plan for worldwide growth, announced July 5, already is generating positive benefits for the company. The plan includes:
- Redirecting funds from the sale of non-core assets into growth opportunities; - Challenging every dollar of overhead costs for a reduction of more than $300 million by year end 1995; - Cutting lifting and other operating costs, from their already competitive levels; - Significantly improving Texaco's worldwide refinery on- stream time and safe operation; - Growing profitable production and reserves of oil and natural gas; and - Harvesting more value from the additional sales flowing from the introduction of its CleanSystem3 gasolines, both in the U.S. and abroad.
Joined by other members of Texaco's senior management team who also spoke during the annual analyst meeting at the company's Harrison, N.Y., executive offices, DeCrane stated, "Our worldwide plan for growth is realistic. It is based on solid expectations rather than projected increases in the price of crude or natural gas or assumed price-enhanced margins in our refining and marketing operations. This vigorous, refocused plan is tied to stretch targets, which are designed to thrust Texaco into the upper quartile in competitiveness and profitability -- a plan that calls for us to invest some $19 billion over the next five years to create additional growth opportunities around the globe."
Texaco's management team, noted DeCrane, already is well underway in seizing opportunities stemming directly from this plan. Building on the company's demonstrated success as a fully cost- competitive finder of oil and natural gas reserves, Texaco is concentrating its efforts on asset redeployment, overhead reduction and improving operating efficiencies through cost control and the strengthening of core businesses.
Citing specific examples of progress gained from Texaco's enhanced growth plan, DeCrane highlighted the following.
- Texaco has completed the sale of its major commodity chemical activities, assembling some $860 million for more attractive opportunities than a line of activity that returned, on average, about half the cost of capital. - Sale of the company's lube oil additive business remains under active negotiation and is expected to close in the first quarter of 1995. - Negotiations for the sale of major portions of 300 scattered producing fields in the U.S. are progressing well and sales are expected to close in the first quarter in 1995. Proceeds from the sale of these underperforming assets, as well as from the chemical company and the lube oil business, will be redirected largely to multiple growth opportunities in the core domestic and international areas. - Texaco has continued to increase the marketshare of its CleanSystem3 gasolines, introduced last spring in the U.S., Europe and Latin America. Whereas demand for gasoline in the U.S. was up one percent over last year, sales of Texaco's branded gasoline rose twice as much -- by more than two percent. - The company has reduced its total operating expenses by some $650 million, or 11 percent, since 1991. It will continue to drive down expenses, eliminating unnecessary layers of supervision and non-essential work. - The company has increased worldwide production in 1994 by more than 50,000 barrels of oil per day and 60 million cubic feet of natural gas per day.
DeCrane, speaking about Texaco's goals for the next five years, said, "We have the skills and experience for success. We are concentrating on those programs that grow value and enhance our margins, not as a passenger on a wild ride of price increases, but instead, by controlling our costs and seizing growth opportunities that provide competitive returns at today's prices."
The company is planning and investing to increase U.S. production from 1995 through 1999 by 80,000 barrels of oil equivalent daily with its opportunities in the Gulf of Mexico, the Permian Basin in Texas and South Louisiana.
Internationally, Texaco is scheduling an increase of more than 145,000 barrels of oil equivalent daily by 1999, or an improvement of 34 percent over its 1994 levels. This increase will come from sources such as the Strathspey, Captain and Erskine fields in the North Sea and the Dolphin field in Trinidad. The company also plans to nearly double its current production from the Partitioned Neutral Zone between Kuwait and Saudi Arabia.
Commenting on the company's growth beyond the turn of the century, DeCrane outlined Texaco's aggressive and refocused exploration strategy. "We are concentrating our efforts where high- impact, profitable reserves are likely, and where Texaco has a core competency or a business presence that we can leverage," he said. Those prospects include the deep waters in the Gulf of Mexico and offshore Nigeria, as well as new plays on the Gulf of Mexico Shelf, the North Sea, Southeast Asia, Russia and China. DeCrane noted that the Yetagun field offshore Myanmar is showing encouraging results; a five-well drilling program in the East China Sea has begun on recently acquired acreage; and the company has excellent lease positions in deep waters in the Gulf of Mexico.
"Texaco people around the world understand the challenge," concluded DeCrane. "They know we have to retain and strengthen the top quartile positions we've already achieved, while stretching ourselves to attain top positions in other areas of activity. Our targets are high, but they are what it takes to achieve our vision for Texaco."
CONTACT: Texaco Inc., White Plains
Dave Dickson, 914-253-4128 J. Michael Trevino, 914-253-4175 Jim Reisler, 914-253-4389 Cynthia Michener, 914-253-4743
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|Date:||Nov 30, 1994|
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