ARCO TO CUT STAFF, REGROUP IN LOWER 48

ARCO will reduce its workforce by about 1,500 and reorganize U.S. Lower 48 operations as part of a program to cut costs and increase profits "while responding to changes in the marketplace."

Chairman Lodwrick M. Cook said, "A combination of factors, including depressed natural gas prices, lower product margins on the West Coast, lower chemical earnings due to a worldwide economic slowdown, and the prospect of major capital investments to meet clean fuel requirements, makes this move necessary.

"While we do not expect natural gas prices to improve dramatically in the near term, the long term outlook is brighter, and we will continue oil and gas exploration efforts in the Lower 48.

"We hope to make the transition as fair and equitable as possible through an enhanced retirement package and special termination plan."

An undetermined charge will be taken against earnings to cover personnel reductions that will begin this summer.

WHAT'S PLANNED

Most staff reductions will occur in ARCO Oil & Gas Co., ARCO'S Lower 48 oil and gas exploration and production division based in Dallas. Its workforce will be reduced by about 900 employees from the current level of about 5,350.

Affected employees will be notified by yearend.

ARCO district offices will be realigned.

The Layfayette, La., southeastern district office will be combined with the southern district office, Houston, to form an eastern district office in Houston. The Bakersfield, Calif., western district office will be combined with the central district office in Midland, Tex., to form a new western district office headquartered in Midland. Area offices will be maintained in Lafayette and Bakersfield.

Some administrative support services will be moved from Dallas to the Houston and Midland offices.

A new exploration and production technology unit will be formed from existing research and technical service functions and other technical staff groups. The new unit, based in Plano, will report to corporate headquarters in Los Angeles and serve the three ARCO divisions responsible for exploration and production: ARCO Oil & Gas Co., ARCO Alaska Inc., and ARCO International Oil & Gas Co.

Also affected will be ARCO Products Co., ARCO's refining and marketing division headquartered in Los Angeles. Its U.S. workforce of 3,200 will be reduced by about 145. A regional marketing office in San Mateo, Calif., will be closed and regional administration shifted to Los Angeles.

The remaining personnel reductions will come from other ARCO operations throughout the U.S.

ARCO Alaska is reviewing its organization and staff levels. Expectations are for some reductions of workforce resulting from these reviews and from continuing consolidation of activities in Prudhoe Bay oil field.

ARCO's total workforce numbers about 20,000. That excludes foreign nationals who work for ARCO overseas, employees of ARCO's wholly owned Prestige Stations Inc. marketing subsidiary, and ARCO Chemical Co., in which ARCO owns an 83.4% interest.