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ARCO REDUCES FIVE-YEAR CAPITAL SPENDING PROGRAM; ANTICIPATES LOWER FIRST QUARTER EARNINGS

 ARCO REDUCES FIVE-YEAR CAPITAL SPENDING PROGRAM;
 ANTICIPATES LOWER FIRST QUARTER EARNINGS
 NEW YORK, April 14 /PRNewswire/ -- ARCO (NYSE: ARC) said today that its capital spending for the five-year period 1992-1996 is expected to total approximately $14.7 billion, down approximately 20 percent from last year's five-year estimate of $18.6 billion.
 In a presentation to security analysts here today, ARCO Chairman and Chief Executive Officer Lodwrick M. Cook and other executives said the anticipated capital reductions are spread across each of the company's operating units with spending plans increased only for international activities.
 "We see a changed environment and are directing our spending plans accordingly," Cook said. "At ARCO, we build flexibility into our plans to the greatest extent possible. This is essential in our industry which, by its nature, is quite volatile."
 Reviewing expectations for 1992 first quarter earnings to be announced in late April, Cook said, "Important industry variables such as crude oil and domestic natural gas prices are lower than the 1991 average. In addition, the weak economic climate has continued to negatively impact ARCO's interests in chemicals businesses.
 "The 1992 first quarter earnings for ARCO will be disappointing and below the fourth quarter of 1991," he said. (ARCO's 1991 fourth quarter earnings totaled $268 million, or $1.67 per share. In the 1991 first quarter, the company's earnings totaled $351 million, or $2.17 per share.)
 "While these are difficult times, such times are to be expected in a cyclical business," Cook said. "Although we manage for the valleys as well as the peaks and make mid-course corrections as necessary, we intend to stay the course with our basic business strategies in place. We remain focused on the long-term returns rather than short-term solutions."
 In December 1991, ARCO announced that 1992 capital expenditures were expected to total $2.4 billion, an estimate which has since been reduced to about $2.3 billion, Cook said. Most of the decrease was taken in ARCO's Lower 48 oil and gas operations. In 1991, ARCO's capital expenditures were $2.7 billion, excluding approximately $600 million spent for the acquisition of properties in the Midway-Sunset field in California.
 Of ARCO's five-year capital program, Cook said that more than 60 percent, or $9.1 billion, will be spent on the three upstream oil and gas operations. Eighty percent of the upstream companies' spending will be directed toward exploration and development of existing reserves. In ARCO's previous five-year plan, it expected to spend $11.3 billion on the three upstream companies.
 ARCO Products Co., ARCO's refining and marketing operation, accounts for 16 percent, or $2.4 billion of the five-year plan. This includes expenses to meet federal, state and local clean air and environmental regulations anticipated during the period. ARCO Chemical Co.'s projects represent 13 percent of the total, or $1.9 billion, and will focus on manufacturing improvements and environment, health and safety projects.
 With an Australian mine under development, ARCO Coal Co. expects to spend $700 million, or 5 percent of the five-year plan. ARCO Transportation Co. and other projects will comprise the remaining $600 million, or 4 percent.
 Cook said 1991 was a pivotal year in ARCO's international oil and gas business. "Growing our international businesses has been a basic goal for the past few years, and we are doing that," Cook said.
 ARCO has three major gas fields under development in Southeast Asia, three under development in the U.K. North Sea, and increased exploration activity throughout the world.
 Reflecting its growing international efforts, at the end of 1991 ARCO's overseas reserves were up 16 percent on equivalent barrel basis from 1990. During 1991, ARCO began development of the Pagerungan field in Indonesia, which has estimated gross gas reserves of 1.4 trillion cubic feet, and reached a marketing agreement for the development of natural gas from the Java Sea offshore Indonesia, with estimated gross reserves of 1.1 trillion cubic feet of natural gas. From these two areas, ARCO has added approximately 1.1 trillion cubic feet to its reserves in the past two years.
 In addition, ARCO signed an agreement to develop an offshore China gas field which holds an estimated 3 trillion gross cubic feet of natural gas. ARCO's net share of the China field is approximately 1 trillion cubic feet.
 Cook pointed to ARCO's continued confidence in future exploratory efforts. The company, he said, has the largest state and federal exploratory leasehold position of any oil company operating in Alaska and pursues an active exploration program there. In conducting its Alaskan exploration program, ARCO places particular emphasis on fields which are geographically close to current infrastructure. Point McIntyre, for example is adjacent to the Prudhoe Bay field and will share production facilities with the Lisburne and Prudhoe Bay fields, thereby improving the economics of its production.
 Overseas, ARCO also has drilling projects in areas of current production and, selectively, in new venture areas. During 1991, the company acquired additional acreage in five countries.
 -0- 4/14/92
 /CONTACT: Albert Greenstein of ARCO, 213-486-3384/
 (ARC) CO: Atlantic Richfield Co. ST: New York IN: OIL SU: ERP


AL -- LA004 -- 8396 04/14/92 17:39 EDT
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Publication:PR Newswire
Date:Apr 14, 1992
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