ARCO TO REORGANIZE OPERATIONS IN U.S. LOWER 48

ARCO plans an extensive reorganization of its oil and gas operations in the U.S. Lower 48 states.

Such operations are conducted by ARCO Oil & Gas Co. at present. ' ARCO Oil & Gas Co., with headquarters in Dallas, will be divided into four, self-supporting business units. Each will have its own assets, operations, and business strategies.

A loss of 900-1,000 jobs is expected by the end of the switch to the new setup.

ARCO expects to record an undetermined but "substantial" charge to earnings in fourth quarter 1993 to reflect severance charges, asset write-downs, and property dispositions, The company also expects after tax savings of about $100 million/year when the reorganization is complete.

A transition team will remain in place in Dallas for an extended period to complete the transfer of services from ARCO Oil & Gas to the new business units.

This team also will manage disposition of assets not allocated to the units. The assets will include certain improved real estate, undeveloped leases, and fee land that does not conform to the new structure of operations.

BUSINESS UNITS

Here are ARCO's plans for its four next business units:

• Natural gas. Headquartered in Houston, this unit will operate as an independent exploration and production company with leases mainly in the Gulf of Mexico, Gulf Coast, and Midcontinent.

  Plans call for an aggressive exploration program to focus on gas prone areas where ARCO has achieved success. The goal is to exploit the existing portfolio of fields, maximize the value of undeveloped leases, consider tactical acquisitions, and maintain a small exploration budget for other Lower 48 regions outside its focus area.

  Producing properties to be held by this unit had proved reserves of 2.1 tcf of gas and 100 million bbl of oil and natural (,as liquids as of last Jan. 1.

  Current production is about 680 MMcfd and 45,000 b/d.

• Permian/East Texas. With headquarters in Midland, Tex., this unit will be organized and staffed to exploit existing long-lived fields in the Permian and East Texas basins. It will focus on keeping production costs low and will not have an exploration program beyond what is required to extend and further develop its existing fields.

  The unit's proved reserves last Jan. 1 were 365 million bbl of oil equivalent. Production is 80,000 b/d of oil equivalent.

• California oil. Headquartered in Bakersfield, Calif., this unit will focus on production from existing California properties made up mainly of five self-contained, long-lived fields. The largest is Midway Sunset field.

  Unit assets will include cogeneration operations in three of the fields, as well as conventional steam generating facilities. It will not explore or acquire acreage outside its existing field boundaries.

  The unit held proved reserves of 195 million bbl of oil equivalent as of last Jan. 1. Current production is 43,000 b/d.

• ARCO Long Beach Inc. With headquarters in Long Beach, this unit will continue to manage a production contract with the state of California and the city of Long Beach in Wilmington oil field. It will proceed with development of an optimized waterflood program for the Long Beach unit portion of that field.

  Proved reserves last Jan. 1 were 140 million bbl.

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