Texaco Press Release - Texaco Announces Worldwide Upstream Reorganization New Structure
New Structure, $200 Million In Cost Reductions to Increase Competitiveness
FOR IMMEDIATE RELEASE: THURSDAY, NOVEMBER 12, 1998.
WHITE PLAINS, N.Y., Nov. 12 - Texaco announced today a worldwide upstream reorganization designed to place greater emphasis on the company's long-term production and reserve growth, and to address the need for streamlining costs and improving competitiveness in the current low oil price environment. The reorganization will result in the reduction of approximately 1,000 employees and contractors worldwide, with projected cost savings of an estimated $200 million per year. The reorganization is expected to be completed by the end of the first quarter of next year.
In making the announcement, Texaco Inc. Senior Vice President John J. O'Connor said, "Changes in the industry have fundamentally altered the competitive landscape and Texaco must respond in order to improve its position. By refocusing our capital and resources, the company is positioned to improve efficiencies in current operations and achieve our ambitious growth plans through a strong emphasis on strategic exploration activities, acquisitions and discovered reserve opportunities."
The restructuring is designed to sharply focus Texaco's upstream activities on three key activities: finding and acquiring resources, swift commercial development, and production optimization.
In addition to O'Connor, the following Texaco Inc. Vice Presidents will lead the new organization, with each having worldwide responsibilities:
- Claire S. Farley: President - Exploration & New Ventures. Farley most recently served as President, Texaco North America Production. In her new position, Farley will be responsible for finding and securing resources through worldwide exploration, new ventures and acquisitions. Dr. Bruce S. Appelbaum will continue to oversee Texaco's worldwide exploration activities as Vice President of Worldwide Exploration within the Exploration and New Ventures organization. Farley and Appelbaum will continue to be located in Houston.
- Robert A. Solberg: President - Commercial Development. Solberg most recently served as President, International Production with responsibility for producing activities in Asia, the Pacific Rim, West Africa and Latin America. In his new position, Solberg will be responsible for the assessment of commercial viability and swift development of new assets. Solberg will remain in Houston.
- Clarence P. Cazalot, Jr.: President - Production Operations. Cazalot was most recently President, International Production with responsibility for producing activities in Europe, Eurasia and the Middle East. In his new position, Cazalot will oversee 14 production teams worldwide. Together, this group will work to maximize value from producing fields, increase production, and ensure optimum earnings and cash flow while maintaining safe and environmentally sound operations. Cazalot will relocate from London to White Plains, N.Y.
The new organization is effective January 1, 1999.
"Our industry is in the midst of a prolonged period of low oil prices which places severe pressure on companies to maintain competitiveness and shareholder value, while still providing for long-term growth potential," said O'Connor. "Unfortunately, these industry conditions require that we make tough decisions which impact many employees. We are committed to managing this situation with the greatest amount of consideration for our employees, while at the same time establishing a platform for sustained growth in the future."
Texaco has approximately 8,000 upstream employees and contractors worldwide. The company's 1998 total net production to date is 1.3 million barrels of oil equivalent per day. Texaco's core producing areas include the U.S., the North Sea, Indonesia, the Middle East and West Africa.
The projected reductions in employees and annual costs described is a forward-looking statement within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. No assurances can be given that these reductions will be achieved and they could differ materially as the result of certain factors discussed in the company's periodic reports filed with the Securities and Exchange Commission.
Updated: November 1998