Atlantic Richfield Co. Announces Major Restructuring Plans

Atlantic Richfield Co. will cut 2,000 jobs this year and next, resulting in the loss of about 3,300 jobs, as part of a major restructuring of its U.S. oil operations. The revamp will also take $150-million in after-tax charges to cover costs related to the move. The job cuts follow a reorganization of its oil and gas exploration and production operations in the lower 48 states, which resulted in 1,300 positions already eliminated. The restructuring aims to achieve annual cost savings of about $400-million after tax, with $140-million coming from exploration expense reductions and $260-million from reductions in staff, operating costs, and other expenses.

Key Takeaways:

• Arco will cut 2,000 jobs this year and next, bringing the total job losses to about 3,300.
• The restructuring aims to achieve annual cost savings of about $400-million after tax.
• The cost savings will come from reductions in exploration expenses ($140-million), staff and operating costs ($260-million), and other expenses.
• Arco will take $150-million in after-tax charges to cover costs related to the restructuring.
• The job losses include 1,300 positions already eliminated in the reorganization of its oil and gas operations in the lower 48 states.
• The full annual cost savings should be realized by 1996 after the downsizing is completed.
• The restructuring is part of a trend by oil companies to pare down their exploration efforts in the United States.
• Unocal Corp. has also initiated talks about selling its oil and natural gas properties in California to focus on foreign projects.

Statistics:

• 2,000 jobs will be cut this year and next.
• 3,300 jobs will be lost in total due to the restructuring.
• $400-million is the estimated annual cost savings achievable through the restructuring.
• $150-million is the amount of after-tax charges to be taken against the company's second-quarter earnings.
• $140-million will come from exploration expense reductions.
• $260-million will come from reductions in staff, operating costs, and other expenses.
• 1,300 positions have already been eliminated in the reorganization of its oil and gas operations in the lower 48 states.

Sources:

• Reuters News Agency
• Atlantic Richfield Co.
• Dean Witter Reynolds Inc. analyst Eugene Nowak
• Arco chief executive officer Mike Bowlin
• Unocal Corp.