press release

Texaco Press Release - Shell and Texaco Sign Memorandum of Understanding to Combine U.S. Refining

Agreement Expected Soon Among Texaco, Shell and Saudi Refining, Inc. to Combine U.S. Eastern Refining and Marketing Operations

FOR RELEASE: TUESDAY, MARCH 18, 1997.

WHITE PLAINS, N.Y., March 18 - Shell Oil Company and Texaco Inc. today announced the signing of a memorandum of understanding to combine the major elements of their midwestern and western U.S. refining and marketing activities and their total U.S. transportation, trading and lubricants businesses. The new company will continue to market gasoline under both the Texaco and Shell brands through the thousands of independent wholesalers and retailers who bring the products to the consumer.

The two companies also announced that they and Saudi Refining, Inc. (SRI) have made significant progress in discussions to combine their eastern U.S. refining and marketing businesses. They are very optimistic that an agreement will be reached in the second quarter of 1997.

In making the announcement Shell Oil Co. President and CEO Philip J. Carroll said, "There is a powerful case for fundamental change in the way petroleum refining and marketing companies operate in the United States. For several years, the industry has faced difficult business conditions requiring increased efficiencies. This initiative will create new opportunities for our customers, employees, vendors and the communities in which we work and live."

Texaco Chairman and CEO Peter I. Bijur added, "An alliance of Texaco's and Shell's downstream operations is a major step toward much needed change. By uniting the complementary strengths of these organizations, we will create a new entity with economic potential far greater than the sum of its parts. The result will be a more competitive company with the ability to create long-term jobs, greater value for both brands, reliable sources of quality products at competitive prices and the best possible returns for our shareholders."

Memorandum of Understanding to Form New Company

Under the terms of the memorandum of understanding signed today, Texaco and Shell will form a limited liability company comprising their midwestern and western refining and marketing activities and nationwide transportation and lubricants businesses. Shell will have 56 percent ownership and Texaco will hold 44 percent of the new company, which is expected to be formed as soon as practical following regulatory review and the signing of a definitive agreement.

The exploration, production and chemical businesses of these companies are not included in the new company.

The new company expects to be able to achieve substantial efficiencies largely by adopting best practices of both companies, and from shared management systems, business processes and support functions. These savings are not contingent upon closure of refineries or other major operating facilities. However, future decisions regarding the new company will be made on the basis of achieving the objectives of the business plan.

Messrs. Carroll and Bijur emphasized that the philosophy underpinning the venture is to improve performance and growth opportunities in the United States. As the new company structure is established there may be some reduction in workforce during the transition, but the expectation is that net job creation will ultimately result from long-term growth opportunities generated by the new venture.

Both Texaco and Shell have agreed to the strategic importance of establishing a new company that will be a leader in diversity, which will embrace inclusion, openness and equal opportunity for all employees and business partners. As part of establishing the new company, comprehensive employment and business partnering initiatives will be developed that are aligned with its business objectives.

Progress on Establishing a U.S. Eastern Refining and Marketing Company

SRI, Texaco and Shell have made significant progress in discussions toward a separate memorandum of understanding to combine Star Enterprise (a 50/50 joint venture between SRI and Texaco in the eastern U.S.) with Shell's eastern U.S. refining and marketing business. They anticipate that an announcement will be made soon.

Until completion of regulatory review and definitive agreements, all Texaco, Star Enterprise and Shell downstream operations will continue to operate separately.

Shell Oil Co. is a Houston-based affiliate of the Royal Dutch/Shell Group of Companies. Texaco Inc. is based in White Plains, N.Y. SRI is a Houston-based affiliate of Saudi Aramco.

    For more information contact:

    Shell Oil Co. Media Relations  (713) 241-4544

    Kitty Borah, Stacy Hutchinson


    Texaco Media Center            (914) 253-4177

  

TOTAL ASSETS OF NEW COMPANY
FACT SHEET

TEXACO ASSETS SHELL ASSETS ASSETS OF NEW COMPANY
Texaco Refineries (4) Shell Refineries (4) New Company Refineries (8)
Anacortes, Wash. Capacity: 136,000 bpd Anacortes, Wash. Capacity: 136,000 bpd
Martinez, Calif. Capacity: 155,000 bpd Martinez, Calif. Capacity: 155,000 bpd
El Dorado, Kan. Capacity: 100,000 bpd El Dorado, Kan.Capacity: 100,000 bpd
Wood River, Ill.Capacity: 271,000 bpd Wood River, Ill.Capacity: 271,000 bpd
Los Angeles, Calif.Capacity: 92,000 bpd Los Angeles, Calif.Capacity: 92,000 bpd
Anacortes, Wash.Capacity: 108,000 bpd Anacortes, Wash.Capacity: 108,000 bpd
Bakersfield, Calif.Capacity: 58,000 bpd Bakersfield, Calif.Capacity: 58,000 bpd
Odessa, Tx.Capacity: 28,000 bpd Odessa, Tx.Capacity: 28,000 bpd
Total Texaco Capacity:
386,000 bpd
Total Shell Capacity:
562,000 bpd
Total Combined Refinery Capacity:
948,000 bpd
Texaco Percent of U.S. Capacity: 2.5% Shell Percent of U.S. Capacity: 3.6%
Terminals Terminals Terminals
19 crude oil and products terminals (own or have partial interest) 57 crude oil and products terminals (own or have partial interest) 76 crude oil and products terminals (own or have partial interest)
Retail Marketing Retail Marketing Retail Marketing
Approximately 4,400 Texaco-branded outlets in 24 states. Approximately 4,477 Shell-branded outlets in 19 states. Approximately 8,877 branded outlets in 28 states.
Texaco percent of marketshare in joint venture area: 6% Shell percent of marketshare in joint venture area: 8%
Pipeline Pipeline Pipeline
Ownership interest in approximately 30,000 miles of pipeline throughout the United States Ownership interest in approximately 15,600 miles of pipeline throughout the United States Ownership interest in approximately 45,600 miles of pipeline throughout the United States
Lubricants Plants (5) Lubricants Plants (5) Lubricants Plants (10)
River Rouge, MICapacity: 7,300 bpd River Rouge, MICapacity: 7,300 bpd
Deer Park, TXCapacity: 9,500 bpd (2 trains) Deer Park, TXCapacity: 9,500 bpd (2 trains)
Charleston, SCCapacity: 8,250 bpd Charleston, SC Capacity: 8,250 bpd
Martinez, CA Capacity: 5,000 bpd Martinez, CA Capacity: 5,000 bpd
Galena Park, TX Capacity: 8,600 bpd Galena Park, TX Capacity: 8,600 bpd
Wood River, IL Capacity: 8,300 bpd (2 units) Wood River, IL Capacity: 8,300 bpd (2 units)
Los Angeles, Calif. Capacity: 5,500 bpd Los Angeles, Calif.Capacity: 5,500 bpd
Carson, Calif. Capacity: 2,300 bpd Carson, Calif. Capacity: 2,300 bpd
Norfolk, Va. Capacity: 4,100 bpd Norfolk, Va. Capacity: 4,100 bpd
Metairie, La.Capacity: 3,300 bpd Metairie, La. Capacity: 3,300 bpd

Additional background information is available in a document titled: A Case for Change

Updated: March 1997