UNOCAL CORP. REORGANIZES BUSINESS UNITS
UNOCAL CORP. REORGANIZES BUSINESS UNITS LOS ANGELES, July 8 /PRNewswire/ -- Unocal Corp. (NYSE: UCL)
today announced a major reorganization of its operating business units, which is part of the company-wide restructuring program announced in April, and other steps it proposes to take to accelerate its program of reducing debt by $1.5 billion over the next five years and increasing cash flow.
The reorganization consolidates the company's operating divisions into two main units, the Energy Resources Division, which encompasses Unocal's upstream activities, and the Petroleum Products & Chemicals Division, which consolidates the refining, marketing and chemicals business segments. With this restructuring the company will eliminate about 1,100 positions and implement other significant expense reductions this year. Earlier, Unocal projected that employee reductions would range between 800 and 1,200. The company anticipates these expense and work force reductions will increase after-tax cash flow by $200 million per year beginning in 1993. In recent months the company has sold its polymers and chemicals distribution business, as well as its product terminals network in the southeastern United States. Unocal is negotiating for the sale of its nationwide Auto/TruckStop system and is phasing out its product marketing in the Southeast. The company has identified and started the sales process of additional non-strategic assets, which, as previously announced, could generate at least $700 million in after-tax proceeds over the next two years. Unocal also said it was contemplating, depending upon market and other conditions, the private placement of around $500 million of securities convertible into approximately 7 percent of the presently outstanding shares of its common stock. The issue would complement -- not substitute for -- the restructuring program now under way by permitting the company to expand development of proven undeveloped crude oil and natural gas reserves in the United States and accelerate the program to reduce total debt by $1.5 billion over the next five years. With the reorganization of its operating units, the company will eliminate 450 positions in petroleum and geothermal energy exploration and production, 400 in downstream operations, and another 250 in corporate staff and research groups. The new Energy Resources Division combines three existing divisions -- International Oil & Gas, North American Oil & Gas and Geothermal -- and eliminates or downsizes the seven regional structures in North America. Staff functions from the three existing divisions and some of the former regions will be consolidated. The total employee reduction for Energy Resources is more than 16 percent of the salaried work force. Executive level positions and total salaries will be reduced by more than 20 percent. The Energy Resources Division will be divided into four line groups. The first group includes Unocal Thailand, Unocal Indonesia, Louisiana onshore and all offshore areas in the Gulf of Mexico, and the Permian Basin (primarily West Texas). These are large-scale operations that offer major development and exploration opportunities and will be high-growth areas, commanding significant capital investment. The second operations group includes the rest of the United States (including California and Alaska), the United Kingdom, Netherlands and Canadian operations. The goal for this group is to maximize cash flow from existing resources through focused capital investment and operating expense management. The third group is worldwide exploration, which will be downsized and consolidated in Sugar Land, Texas, near Houston. Unocal will continue to be an active explorer for oil and gas, especially in frontier areas having potential for significant reserve additions. Total exploration costs will decrease due to the consolidation of offices and more tightly focused programs. The fourth group in the Energy Resources Division is geothermal resource and development and power generation, a business in which Unocal already has experience and one that offers significant potential opportunities. U.S. geothermal operations will be consolidated with most personnel based in Santa Rosa, Calif. The new Petroleum Products & Chemicals Division reflects the previously announced downsizing of Unocal's downstream operations. The company said that the consolidation of the downstream divisions will reduce overhead costs to bring them in line with new operating requirements. As part of the reorganization, Unocal will close its office complex in Schaumburg, Ill., by September 1993, and consolidate the Schaumburg accounting and information services functions with other operations elsewhere. The planned company-wide employee reductions are in addition to personnel in business units that were previously being restructured or offered for sale. The company has offered a voluntary enhanced retirement program and severance package, which will be available until mid-August. The extent of involuntary employee reductions will be determined after the results of the voluntary programs are known. -0- 7/8/92 R /CONTACT: Barry Lane of Unocal, 213-977-7601 (UCL) CO: Unocal Corp. ST: California IN: OIL SU: RCN JL -- LA005 -- 7662 07/08/92 21:38 EDT
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|Date:||Jul 8, 1992|
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