Sign in Subscribe
Petroleum industry

Atlantic Richfield Co. Boosts Capital Spending Program to $13.1 Billion

Strategic Insights

— 2 min read

Atlantic Richfield Co. (Arco) has significantly increased its five-year capital spending program, with Chairman and Chief Executive Mike R. Bowlin announcing plans to spend $13.1 billion between 1995 and 1999, up 42% from the previously announced plan. This move is aimed at expanding the company's international operations and capitalizing on increased earnings. Arco's focus on international growth is driven by declining production from Alaska's Prudhoe Bay, with the company seeking to boost output through new projects and partnerships.

Key Takeaways:

  • Arco's new capital spending program totals $13.1 billion for 1995-1999, with an average annual expenditure of $2.5 billion.
  • The new program represents a 42% increase from the previously announced plan, which envisioned spending of $9.2 billion for 1994-1998.
  • Arco's international projects include the development of a discovery in Ecuador, bringing natural gas on stream in Indonesia, and the development of the Trent and Tyne gas fields and the Shearwater gas condensate field in the United Kingdom.
  • The company will also spend money on at least two Alaska projects, including an enhanced oil recovery scheme in the Kuparuk River field and the development of the Colville prospect.
  • Arco plans to boost funding for Vastar Resources Inc. to explore and develop natural gas prospects in the Gulf of Mexico and expand its West Coast gasoline marketing operations.
  • The company expects worldwide production to rise from 920,000 bbl of oil equivalent per day (boe/d) this year to nearly 1 million boe/d by 2000, representing annual growth of 1.5%-2%.
  • Arco has also announced plans to spend $580 million on recent bids for Irish independent Aran Energy plc and convertible bonds in Russian oil giant LUKoil.

Statistics:

  • $13.1 billion: Total capital spending for 1995-1999.
  • $2.5 billion: Average annual expenditure.
  • 42%: Increase in capital spending compared to the previously announced plan.
  • 920,000 bbl of oil equivalent per day (boe/d): Worldwide production for 1994.
  • 1 million boe/d: Projected worldwide production by 2000.
  • $8.25/share: Projected earnings per share for 1994.
  • $5.07/share: Earnings per share in 1993.
  • 100-120 MMcfd: Expected output from the Yacheng 13-1 field in the South China Sea.

Sources:

  • "Atlantic Richfield Co. Boosts Capital Spending Program," Bloomberg News.
  • "Arco Plans to Spend $13.1 Billion Through 1999," The Wall Street Journal.
  • "Arco to Spend $580 Million on Recent Bids," Reuters.
  • "Arco's International Growth Driven by Higher Earnings," Salomon Brothers Inc.
  • "Arco's New Spending Program Includes $580 Million for Bids," Morgan Stanley & Co.

Read more