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 WHITE PLAINS, N.Y., Dec. 7 /PRNewswire/ -- Texaco Inc. Chairman and Chief Executive Officer Alfred C. DeCrane, Jr., today reported to more than 150 security analysts at the company's executive offices in Harrison, N.Y., on the progress that Texaco units across the world continue to make in generating value for its shareholders.
 DeCrane, leading a team of Texaco's senior executives, who also spoke at the annual analysts' meeting, stated, "very recently, we refocused our strategies -- targeted them for our vision of this industry and this company." These strategies carry a number of common threads, including the commitment to add shareholder value.
 Texaco's management team has reinforced these strategies by committing that the company continually re-examine and re-engineer its business processes to meet customer quality expectations, improve competitiveness and reduce operating expenses, DeCrane noted. Texaco intends to position itself in the top competitive quartile of each of our businesses, he added.
 "That's just one aspect of what we are about here at Texaco," said DeCrane. "Another of our common threads notes that capital will be systematically directed to successful businesses and to clearly focused new opportunities; and will be reduced or withdrawn from less successful ones."
 DeCrane specifically cited examples of the way that Texaco is adding value and achieving its goals of controlling costs and expenses:
 -- Restructuring of U.S. upstream and downstream operations the last two years that has produced annual pre-tax savings of some $54 million;
 -- A decline in cash operating expenses since 1991 of 8 percent, or a savings of $506 million;
 -- Replacing on average, over the last five years, 106 percent of its worldwide production, ahead of the industry average;
 -- Finding and development costs of $3.90 a barrel, better than the average of Texaco's key competitors.
 -- Developments to increase production by 11 percent, or some 125,000 barrels per day over the next five years.
 DeCrane noted that Texaco is continuing to add value in other ways, such as its business process renewal efforts. By working to flatten the company's organization, apply technology innovatively and pursue excellence in human resources, Texaco is opening new ways to enhanced cost competitiveness, he said.
 In the upstream sector, Texaco's "portfolio approach" mixes a selection of low, medium and high risk exploration opportunities together with those opportunities where established reserves entail technological risk, like its Siberian and Timan-Pechora projects in Russia and the Ping Hu venture in the East China Sea.
 Texaco's strategy is to approach exploration as a business, DeCrane said. "This means we intend to run a balanced exploration portfolio -- one that will pay its way, produce a profit and build value," he said. Indeed, the company has added $1.88 of value for every $1 spent on worldwide exploration in the last three years.
 Texaco also intends to expand participation in the full range of the worldwide natural gas business, DeCrane said. The company's recently signed Dolphin contract in Trinidad; new initiatives and a horizontal drilling program in the Guajira region of Colombia; and the quick and novel development of the Orwell Field in the southern North Sea are examples of this strategy.
 As with all Texaco exploratory opportunities, emphasis will be given to current core areas and those with strong core-potential, DeCrane said. Internationally, Texaco is increasingly emphasizing the negotiation of more flexible terms, greater access to geological and geophysical options and pre-packaged rights to expand contact periods where new investment will bring improved levels and recovery, he added. He cited, as examples, the several extensions of the Rokan area contracts, covering the Minas and Duri fields in Indonesia, which have enhanced the value for both Texaco and Indonesia.
 DeCrane cited the recent memorandum of understanding to sell Texaco Chemical Company, a wholly owned subsidiary, and its worldwide chemical operations to Huntsman Financial Corporation, an affiliate of the Jon M. Huntsman Group of Companies, as an example of Texaco's strategy to redeploy lower performing assets.
 "Our earlier strategy of aggressively building the specialty side of that chemical business clashed with the chemical industry cycle of excess supply as we saw it," DeCrane said. "We saw that old strategy as being too costly to implement and requiring a capital allocation that could compromise or delay some of our other, higher-return opportunities."
 Elsewhere, Texaco is emphasizing a thorough but prompt review of currently held oil and gas properties and the sale of properties not capable of adding value, all of which has, "cut overhead, enacted efficiencies and created value," DeCrane added. In 1992, 1,500 producing properties were sold, with 1,250 producing properties targeted for 1993 and more scheduled for 1994, all of which should produce approximately $200 million for redeployment.
 An overall business twist will be given to Texaco's "midstream" operations: the pipeline and marine transportation activities, as well as the worldwide trading capabilities, DeCrane said. Indeed, there are a number of promising pipeline investments, including offshore Myanmar and the East China Sea.
 Downstream, Texaco's strategy is to build the business in a selective and focused way by building on cost-benefit tested investments, maintaining a pro-active environmental approach and capitalizing on the company's widely recognized and technologically advanced brands.
 "By a cost-benefit approach to investing, we intend to test any investments rigorously before we design and build massive new or modified units -- particularly those responding to mandated product changes -- on the expectation that the margins will be there," DeCrane said.
 Illustrating that philosophy is the way Texaco's demonstrated technical and market leadership affected California's low sulfur diesel mandate, he added. By making the cost-benefit case, the company achieved some leeway in the regulations and then showed that technology could find a cost-effective response.
 Texaco also continues to exploit technology to build value through alternate energies. The company's co-generation activities and leading position in heavy oil, coal and sludge-waste gasification comprise several avenues of growth, DeCrane said.
 "To be quite clear," DeCrane said in summing up, "we see petroleum and its products in significant demand and as sources of fully competitive earning opportunities well into the 21st century. Texaco intends to benefit as a result. We are implementing strategies to assure that result."
 -0- 12/7/93
 /CONTACT: Dave Dickson, 914-253-4128, Jim Swords, 914-253-4103, Jim Reisler, 914-253-4389, Cynthia Michener, 914-253-4743, of Texaco/
 (TX) CO: Texaco Inc. ST: New York IN: OIL SU:

LG -- NY037 -- 1255 12/07/93 11:52 EST
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Publication:PR Newswire
Date:Dec 7, 1993

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