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ARCO ANNOUNCES REORGANIZATION OF LOWER 48 OIL AND GAS OPERATIONS

 LOS ANGELES, Oct. 25 /PRNewswire/ -- ARCO (NYSE: ARC) announced today that it will undertake an extensive reorganization of all its oil and gas operations in the Lower 48 states, currently known as ARCO Oil and Gas Co.
 The existing company, presently headquartered in Dallas, will be divided into four discreet, self-supporting business units. Each unit will have its own stand-alone assets, operations and business strategies. A reduction of 900 to 1,000 jobs is anticipated by the end of the transition period necessary to complete these changes.
 ARCO expects to realize annual cost savings of approximately $100 million after tax after completion of the reorganization.
 The four new business units will be:
 1. Natural Gas Growth: Headquartered in Houston, this unit will operate as an independent exploration and production company with properties located primarily in the Gulf of Mexico, Gulf Coast and Mid- Continent. An aggressive exploration program will focus on gas-prone areas where ARCO has achieved success. It will exploit its existing portfolio of fields, maximize the value of considerable undeveloped acreage, consider tactical acquisitions, and maintain a small exploration budget for other Lower 48 opportunities outside of its focus area. Producing properties conveyed to this unit had proved reserves, as of Jan. 1, 1993, of 2.1 trillion cubic feet of natural gas and 100 million barrels of oil and natural gas liquids. Current production approximates 680 million cubic feet of natural gas per day and 45,000 barrels of oil per day.
 2. Permian/East Texas: Headquartered in Midland, Texas, this unit will be organized and staffed to exploit existing long-lived fields in the Permian, Southeast New Mexico and East Texas basins. It will focus on keeping production costs low and will not have any exploration program beyond what is necessary to extend and further develop the existing fields. Its proved reserves on Jan. 1, 1993, were 365 million barrels of oil equivalent. Production currently is 80,000 barrels equivalent per day.
 3. California Oil: Headquartered in Bakersfield, Calif., this unit will focus on production from existing California properties which are constituted primarily of five self-contained, long-lived fields, the largest being the Midway-Sunset field. It will not explore or acquire properties outside of its existing field boundaries. Its assets will also include cogeneration operations in three of the fields, as well as conventional steam-generating facilities. The unit had proved reserves on Jan. 1, 1993, of 195 million barrels of oil equivalent. Daily current production is 43,000 barrels.
 4. ARCO Long Beach Incorporated: Headquartered in Long Beach, Calif., this specialized unit will continue to manage a contractual producing arrangement with the State of California and the city of Long Beach in the Wilmington field. It will move forward with the development of an optimized waterflood program for the Long Beach unit portion of that field. Proved reserves on Jan. 1, 1993, were 140 million barrels.
 To complete the transfer of services from ARCO Oil and Gas Co. to the new business units, a transition team will remain in place in Dallas for an extended period. This team will also manage the disposition of assets not allocated to the units. Such assets will include certain improved real estate, undeveloped leasehold property, and fee lands which do not conform to the new structure of the operations.
 ARCO expects to record a substantial one-time charge to earnings in the 1993 fourth quarter to reflect the impact of severance charges, asset writedowns, and property dispositions. The amount of the charge is not known at this time.
 -0- 10/25/93
 /CONTACT: Albert Greenstein, 213-486-3384, or Earl Sims, 214-880-4505/
 (ARC)


CO: ARCO ST: California IN: OIL SU:

MF-JB -- LA008 -- 6294 10/25/93 11:57 EDT
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Publication:PR Newswire
Date:Oct 25, 1993
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