TEXACO SCHEDULES BROAD RESTRUCTURING PROGRAM

Industry's drive to restructure is far from over.

That was apparent when Texaco Inc. last week outlined a campaign designed to promote company growth and slash overhead costs by $300 million.

One of the key elements in Texaco's program is the proposed sale or trade of interests in about 300 U.S. oil and gas fields.

Future upstream U.S. programs will focus on remaining core oil and gas assets, which account for more than 90% of Texaco's profits, cash flow, production, and reserve base in the country.

Big downstream changes are planned, too, as the program spreads throughout international operations.

The campaign, which will aim to bolster operating efficiency through cost control and fewer layers of supervision, could see a world workforce reduction of 2,500 during the next 12 months.

Staff reductions will take place via normal attrition, retirements, and separations. Where possible, the company will move employees to "areas of growth opportunities."

Under consolidations and other actions completed during the last 2 years, Texaco's work force was reduced by more than 13%. That does not include reductions stemming from the sale of assets such as last April's sale of Texaco Chemical Co. to the Huntsman organization.

The campaign will result in a charge to earnings of about $165 million during second quarter 1994. The charge will cover a provision for employee separations, a writedown to fair market value of certain international properties being offered for sale, and a writedown to market value of office .facilities that will become surplus as a result of consolidations.

Included in the charge to earnings, and as indicated at the end of first quarter 1994, will be a net $49.5 million involving completion of the sale of Texaco Chemical to Huntsman.

WHAT'S PLANNED

Alfred C. DeCrane Jr., Texaco board chairman and chief executive officer, listed these facets of the restructuring program:

Proceeds from the sale of oil and gas fields will be funneled to "multiple growth opportunities" in core U.S. areas, which are slated for production and earnings growth through the end of the decade, and to selected non-U.S. areas where production gains also are in store.
U. S. producing operations will be consolidated into fewer offices with reduced layers of supervision and broadened field level responsibilities.
Non-U.S. rationalization programs are under way, including the sale of heavy oil producing. properties in Colombia.
Texaco Trading & Transportation Inc., the unit that operates the company's crude oil and product transportation system, is reducing several layers of activity and will focus on strengthening its crude oil supply capability. The action is to include improved capability to deliver imported crude oil to the U.S. Midcontinent.
Texaco Trading is forming "a strategic alliance" aimed at cutting the cost of marine transportation while fully protecting the operation's quality.
Texaco's U.S. refining and marketing segments will consolidate units, eliminate layers of management, and reduce general administrative services and support costs by more than 20%.
Programs are in place to support targeted growth for branded Clean-System3 gasoline sales.
The company is on track to complete the sale of its lubricant additives business and start up its proprietary-process propylene oxide/methyl tertiary butyl ether plant at Port Neches, Tex., this year. The plant will produce about 400 million lb/year of propylene oxide and 14,000 b/d of MTBE.
A downstream restructuring program is well under way in Europe and Latin America, trimming layers of management and consolidating accounting, financial, and related activities. The programs include asset sales and rationalization.
Bids are being received for the sale of equity interest in downstream assets in Nigeria and other West African countries.

The company's key affiliates-Star Enterprise, Caltex Petroleum Corp., and Caltex Pacific Indonesia-have similar programs focused on value growth, cost containment, and streamlining.