Texaco Press Release - Texaco Chairman Reports to Shareholders Describes 1998 As "Difficult,"
Describes 1998 As "Difficult," Points To "Brightening Outlook" For Future
FOR RELEASE: TUESDAY, APRIL 27, 1999.
WHITE PLAINS, N.Y., April 27 Texaco Chairman and Chief Executive Officer Peter I. Bijur today expressed cautious optimism for the future, reporting that the company is "well positioned" to take advantage of stabilizing economies in key regions and accelerating growth in energy demand. Speaking before 340 shareholders at Texaco's 98th Annual Meeting, Bijur highlighted the company's strong operational performance in 1998, including increased production, aggressive cost reductions and the successful launch of U.S. downstream alliance companies with Shell and Saudi Refining, Inc.
Commenting on the company's 1998 earnings, Bijur said, "Despite an excellent operational performance, our financial results were much lower than those reported last year. These results are directly linked to the difficult oil price environment which our company faced in 1998." He noted that while low oil prices continued to impact earnings in the first quarter 1999, which were announced this morning, the company does see indications of improved market conditions.
"As worldwide economic momentum builds, it will have a powerful and positive impact on the energy sector and on Texaco's business. Given our economic outlook, we expect a pick-up in demand for 1999, when world oil requirements will rise by 800,000 barrels per day nearly double the increase in 1998."
Bijur discussed the company's focus on growing shareholder value in light of the recent industry mergers and consolidation. While acknowledging that Texaco is open to the concept of acquisitions and mergers, he said, "We are not interested in a merger solely for the sake of getting bigger. For us, the compelling drivers for any merger are an increase in cash flow generated by the deal, the overall economics of the combination and the business 'fit' of such a merger."
Bijur pointed to other means of achieving growth, including successful exploration ventures, addressing underperforming assets and rigorous cost reductions all of which Texaco achieved in 1998.
Answering a shareholder question about Texaco's diversity program, Bijur stated that Respect for the Individual and diversity go "hand-in-hand" at Texaco to ensure equitable treatment of all employees at Texaco. Notwithstanding the dramatic transformation in 1998 of Texaco's U.S. employee base, which included the transfer of about 11,000 employees to the downstream alliance companies, Bijur said that women and minorities accounted for 59 percent of new hires. He also noted in his comments that of the 243 promotions last year, 49 percent were awarded to women and minorities.
In response to shareholder comments regarding the environmental issues associated with Texaco's former producing activities in Ecuador, Bijur pointed out that those operations were conducted by a consortium of which Texaco Petroleum Company (TexPet) was a minority partner until 1992, when the company ended its participation.
He went on to explain that at the end of TexPet's involvement in the consortium, it agreed to undertake a $40 million remediation program, designed with the Ecuadorian government, to close and remediate approximately 260 sites to ensure against any lasting environmental impact.
Updated: April 1999