Chevron U.S.A. Production Co. and Unocal Corp. have spelled out details of their upstream restructuring programs.
Included in Chevron's plan are staff reductions of 1,700 persons due to consolidations and as many as 600 more from previously announced sales of nonstrategic producing leases.
It is part of a cost cutting program, announced by Chevron Corp. Chairman Ken Derr early this year, designed to cope with hard times (OGJ, Jan 20, p. 29).
Unocal's energy resource exploration and production group will sell or offer for joint ventures at least $350 million in nonstrategic assets, eliminate at least 400 jobs and take other measures aimed at improving efficiency and profits worldwide.
Unocal earlier disclosed plans to boost after tax cash flow by at least $200 million/year company-wide (OGJ, May 4, p. 36).
CHEVRON PROGRAM
Chevron U.S.A. Pres. Ray Galvin last week notified employees these changes are to be in place by September:
- Chevron U.S.A. headquarters will move to Houston from San Francisco. The staff will focus on strategic planning, serve as a technical resource, and concentrate on technology infusion and profit center support. The Chevron Corp. unit's headquarters staff in San Francisco numbers about 35 employees.
- The production department will consolidate into three business units from the current five. The new units will be in Houston, New Orleans, and Bakersfield, Calif. The current unit in Denver will be closed, while Midland, Tex., now home to a business unit, will become the base for two smaller profit centers.
Fourteen profit centers will be created with five reporting to the Houston business unit, five to New Orleans, and four to Bakersfield. Profit centers will manage the company's oil and gas production with responsibility for financial performance.
- The exploration department's two business units in Houston and New Orleans will be consolidated in Houston, leaving a small division office in New Orleans. There will be a few exploration personnel in Midland, Bakersfield, Houston and Lafayette, La., to develop opportunities for evaluation.
When reorganizations and lease sales are complete, the Chevron Production work force will be about 5,800, a 28% cut from the current 8,100,
Some departures are expected to be voluntary as employees elect to take advantage of a special temporary enhancement in Chevron retirement plan being offered until May 15.
Major staff reductions were disclosed earlier by other Chevron operating units. The largest single reduction is at Chevron U.S.A. Products Co.'s Port Arthur, Tex., refinery, where the work force of 1,900 will be cut by nearly 700 and the plant streamlined to reduce operating costs (OGJ, Mar. 16, p. 30).
In addition, Chevron has offered the retirement plan temporary enhancement to about 35,000 employees on the U.S. dollar payroll. The closing date for employees to elect to leave under this program is May 15. At that time many Chevron Corp. business units will reassess their personnel needs and determine whether further reductions are needed.
UNOCAL ACTION
Most of Unocal's operating expense and personnel reductions for its energy resources sector will take place during the next 4 months. Targeted savings are at least $100 million in 1993.
The asset sale program will take about 2 years to generate at least $350 million in after tax proceeds.
John F. Imle, Jr., senior vice-president of energy resources, said expense and staff cuts in the three operating divisions of his group - North American oil and gas, international oil and gas, and geothermal - will result mainly from a more tightly focused worldwide exploration program, consolidation of certain North American regional offices, and restructuring of geothermal and power generation segments.
In oil and gas exploration, Unocal has been active in about 150 geologic trends worldwide. That number will shrink to about 50, mainly frontier plays outside the U.S.
Organizational changes are to include consolidation of regional offices in Midland, Tex., and Oklahoma City into the company's Texas-southeastern region in Houston.
Geothermal operations will be restructured to increase cash flow and capture growth opportunities through the sale or joint venture of some assets.
Specific staff reductions by function or location have vet to be decided, and specific assets to be sold or restructured will be disclosed later "as appropriate."
Most of the assets targeted for sale or restructuring are in North America.
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