TEXACO R&M TO RESTRUCTURE; UNOCAL TO REDUCE WORK FORCE

Restructuring and work force reductions continue in the U.S. petroleum industry.

In the latest moves:

Texaco Refining & Marketing Inc. (TRMI) disclosed a plan to restructure its U.S. executive and support operations. The goal is to further strengthen its competitiveness.
Restructuring will be limited to TRMI's executive offices in Houston and regional staffs in Los Angeles and Tulsa. It will be essentially complete by yearend.
Unocal Corp. said 1,145 employees accepted its voluntary separation and voluntary early retirement packages as part of a company-wide restructuring program unveiled last April.
Unocal also announced plans for a 3 year, $500 million program to expand development of U.S. oil and gas reserves starting in 1993.
Richard J. Stegemeier, Unocal chairman and chief executive officer, said, "We have an inventory of relatively low risk projects here in the U.S. that we feel can be developed profitably, even at prices below current levels. This development program will be funded with cash flow that otherwise would have been used for debt reduction. "

TRMI RESTRUCTURING

TRMI Pres. Don. H. Schmude said, "This restructuring is consistent with the policy under which Texaco units make periodic reviews of their organizational structure and staff allocations to ensure that we maintain optimum efficiency..."

TRMI's executive and senior management offices, presently in Houston, as well as staff support activities for all of TRMI will be consolidated in Los Angeles in existing office space. The regional office staffs, whose activities are based in Los Angeles and Tulsa, will cease operations.

TRMI's new headquarters in Los Angeles will be near most of Texaco's wholly owned U.S. refining and marketing assets.

The four TRMI owned refineries and the company's three marketing divisions will not be significantly affected by the restructuring.

TRMI refineries are located in El Dorado, Kan.; Wilmington, Calif.; Bakersfield, Calif.; and Anacortes, Wash. The company's marketing diversions are based in Los Angeles, Tulsa, and Kirkland, Wash.

Offices of Texaco Lubricants Co., TRMI Business Services Division, and Star Enterprise will remain in Houston.

Formed in 1989, Star Enterprise is Texaco's 50-50 downstream venture with Saudi Refining Inc. Star operates three refineries in Delaware City, Del.; Convent, La.; and Port Arthur, Tex. Star also has related marketing activities in 26 states along the East and Gulf coasts.

Texaco said it will maintain a substantial presence in Tulsa with the Tulsa Marketing Division, which directs marketing in 14 Midcontinent and Rocky Mountain states. In addition, the Natural Gas Plants and Liquids Division, as well as a major mainframe computer center and support functions, will continue in Tulsa.

Schmude said the restructuring will involve personnel transfers' as well as staff reductions. While the exact number of employees involved is not yet known, large scale personnel reductions are not expected.

UNOCAL PROGRAMS

Unocal said results of its voluntary separation and retirement programs and reorganization of operations will enable it to realize a goal of reducing its work force by 1,100 employees.

At the same time, Unocal has implemented a series of operating improvements, which, combined with the work force reduction, will increase after tax cash flow by $200 million/year starting in 1993 (OGJ, July 13, p. 18).

"These employee reductions are not an isolated action but part of a larger plan to increase Unocal's cash flow and reduce debt," Stegemeier said.

Proceeds from a $513 million private placement of convertible preferred stock in July are being used initially to speed debt reduction.

So far in 1992, asset sales have generated after tax proceeds of $325 million. The company has sold its polymers and chemicals distribution businesses, its product terminals network in the U.S. Southeast, and other nonstrategic assets.

Unocal expects to generate another $700 million after tax during the next 18 months from the sale of additional assets. The company is considering the sale of its geothermal energy assets in California's Imperial Valley and is negotiating the sale of its PureGro Co. subsidiary and its nationwide Auto/Truck-Stop system.

Unocal expects to take a one time after tax charge of about $25 million in the third quarter for the cost of the early retirement and severance packages. A related $5 million after tax charge was taken earlier this year.