FOCUS-Texaco TX.N questions value of exploration By David Chance
WHITE PLAINS, NY, Dec 10 (Reuters) - Texaco Inc, the third
largest U.S. oil company in terms of revenues, is questioning
the value of finding oil and gas through exploration as a way
of growing its business, chief executive Peter Bijur told the
company's annual analyst meeting on Wednesday.
"The number of impact reserves that are being found through
exploration is limited," Bijur said. "The jury is out, ladies
and gentlemen, on exploration. We will reduce the money we are
going to spend in 1998 and beyond."
Bijur said that Texaco will have a total capital budget of
$4.6 billion in 1998, excluding acquisitions, compared with a
budget of $4.5 billion for this year.
Spending on exploration and production of oil and gas in
1998 will be flat at $3.8 billion, the same as the final figure
for 1997. But exploration spending by itself would be lower,
although he did not give a precise figure.
Instead, Texaco will concentrate on improving exploitation
of existing properties and partnerships, Bijur said, adding
that, "you can always find reserves on Wall Street".
Texaco's debt to equity ratio will end the year at 32
percent, well within the 30-40 percent target range for the
company and this will enable it to look at any assets that comeonto the market.
Bijur said Texaco, which aims to grow output from 1.19
million barrels of energy equivalent per day to 1.75 million by
2002, is not relying on any improvement in energy prices as it
seeks to double 1995 earnings by the year 2000.
Texaco is forecasting West Texas Intermediate oil prices of
$19 a barrel by 2000 and is assessing projects that have the
capability to be profitable at $15 per barrel oil.
In the upstream sector, Texaco is concentrating on its
Karanchaganak field in Kazakhstan, which it believes will add
700 million barrels of energy equivalent of reserves. Texaco is
also relying on offshore West Africa, the North Sea, deepwater
Gulf of Mexico and Latin America to boost reserves.
As part of the Kazakh development, Texaco is evaluating
pipelinge partnerships to ship the natural gas from the field
into Western Europe.
Texaco remains wary of Russia, but is considering a bid for
Rosneft, a large Russian oil company which is in the process of
being privatised and may join a consortium to bid.
Texaco and Mobil Corp MOB.N are involved in a stalled oil
project in Timan Pechora, but may consider developing offshore
fields near the Sakhalin Peninsula in Eastern Siberia, where
Bijur said Russian oil companies do not have the expertise.
Texaco will continue to bear down on costs and is currently
assessing what to do with its European refining and marketing
operations, which account for $2.0 billion in assets.
"We are not yet satisfied. We have identified several
options...and will take actions either within the business or
externally," Bijur said.
At a news conference after the presentation, Bijur said
that the sale of the European assets was one option, but
stressed that it was not the only one.
Texaco is already involved in the U.S. in the formation of
the largest domestic refiner with Shell Oil Co, the U.S. arm of
Royal Dutch/Shell Group RD.AS SHEL.L and Saudi Aramco with
a 13 percent share of the U.S. refining market.
Approval from the U.S. Federal Trade Commission for the
deal had been expected in October, but Texaco is optimistic it
will be given before the end of this year.
As part of the approval process, Shell will have to sell
its Anacortes refinery in Washington State and Texaco its 14.2
percent stake in the Colonial Gas Pipelines System. REUTERSRtr 20:54 12-10-97 |
