EXHIBIT 99.1
TEXACO ANNOUNCES $600 MILLION REDUCTION IN
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1999 CAPITAL AND EXPLORATORY SPENDING PLAN
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Spending Plan Coupled with Accelerated $650 Million Cost Reduction Program
FOR IMMEDIATE RELEASE: THURSDAY, JANUARY 7, 1999.
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WHITE PLAINS, N.Y., Jan. 7 - Texaco Inc. today announced a revised 1999
capital and exploratory (capex) plan of $3.7 billion, including subsidiaries and
affiliates, down $600 million from its original $4.3 billion plan. Texaco will
also accelerate its $650 million cost and expense reduction program announced in
December 1998.
Commenting on the revised capex plan, Texaco Chairman and Chief
Executive Officer Peter I. Bijur stated, "Given this period of low energy
prices, our revised spending plan together with our cost and expense reduction
program are appropriate actions. We are strategically focusing capital on the
key projects that represent optimum long-term growth opportunities, and at the
same time continuing our effort to drive down costs. These measures will assist
Texaco in weathering this extended period of low prices."
At Texaco's annual security analysts meeting in December 1998, the
company announced a 1999 capex plan of $4.3 billion, based on an average WTI
crude price of $15.00 per barrel. The revised plan of $3.7 billion is based on a
lower crude price premise, reflecting general industry consensus that crude oil
prices will not rebound as previously expected.
For the year 1998, capital expenditures are expected to be 11 percent
below the $4.6 billion originally planned. Texaco reduced its spending program
during 1998 when it became evident that oil prices would remain low for an
extended period. Preliminary 1998 and forecasted 1999 expenditures for
subsidiaries and affiliates are as follows (in billions of dollars):
1998 1999
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Subsidiaries $3.0 $2.7
Affiliates 1.1 1.0
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Total $4.1 $3.7
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The subsidiary capital program includes most of Texaco's worldwide
upstream business and its European and Latin American downstream businesses, as
well as natural gas and other businesses.
The affiliate capital program includes Texaco's share of the U.S.
downstream alliance companies (Equilon and Motiva), Caltex, and power and
cogeneration projects in Thailand, Italy, Philippines and Brazil. The capital
requirements of Equilon, Motiva and Caltex, which are fully funded through
affiliates, will be lower in 1999. Expenditures for the power and cogeneration
projects, also funded through affiliates, will increase by some $250 million in
1999.
In the U.S. upstream, spending will be directed primarily toward
continuing development of the Deepwater Gulf of Mexico. Major international
upstream projects include exploration activities in Nigeria, Angola and
Trinidad. Development work on the Captain B, Jade and Elgin-Franklin fields in
the U.K. North Sea and projects in Denmark will be fully funded. However,
development expenditures in certain other international areas will be deferred
due to depressed economic conditions.
In the Europe and Latin America downstream regions, 80 percent of the
expenditures are centered on marketing and 20 percent on manufacturing.
Marketing expenditures are for service stations and logistical support,
primarily in growth-oriented markets such as the U.K., Ireland and the
Caribbean. Most of the manufacturing capital will be spent at the Pembroke Plant
in the U.K. on feedstock flexibility and projects to satisfy the more stringent
European fuel specification requirements.
At the security analysts meeting, Texaco outlined other steps the
company is taking to manage in the low price environment, including cost and
expense reductions. The company identified recurring annual cost and expense
reductions of $650 million through the year 2000, of which $450 million is
expected to be realized in 1999. Significant efforts are underway to accelerate
the realization of the full $650 million in 1999.
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Note: This press release contains forward-looking statements about Texaco's
plans for capital and exploratory spending and for cost and expense reductions.
These plans may change if business conditions, such as energy prices and world
economic conditions, change. For a further discussion of additional factors that
could cause actual results to materially differ from those in the
forward-looking statements, please refer to the section entitled
"Forward-Looking Statements" in Texaco's 1997 Annual Report on Form 10-K.
CONTACTS: Faye Cox (914) 253-7745
Chris Gidez (914) 253-4042