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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Bob A Louie who wrote (4767)	12/10/1997 9:28:00 PM
From: Lucretius	Read Replies (1) \| Respond to of 95453

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

To: Bob A Louie who wrote (4767)	12/10/1997 9:32:00 PM
From: Thean	Respond to of 95453

<''The jury is out, ladies and gentlemen, on exploration. We will reduce the money we are going to spend in 1998 and beyond,'' he said.> I think this sentence is going make some impact on people thinking. Can anyone see tomorrow Bill Kernen or Maria of CNBC making the above quote in the premarket report? I certain can but I hope not. If they do, then there will be damage short term, the real truth aside. Remember the street trades on rumor and fear, only the real investors buy the shares being traded out. So make up your mind and set your strategy, ladies and gentlemen, on the drillers. Want to protect your miniscue gain? Want to risk it all for a home run? Want to wait and see? Want to sell now and buy back later? I know what I'm going to do. I'm going to place stops.

To: Bob A Louie who wrote (4767)	12/10/1997 9:33:00 PM
From: mph	Respond to of 95453

(Disclaimer: I do not even pretend to know a fraction of what others on this thread know about this industry) That said, doesn't the article re: cutbacks suggest that the strongest drillers, service cos. etc. will still do just fine? This just might mean that the smaller cos. could lose out due to greater efficiency and money with the bigger guys. OR does this mean the smaller cos. could undercut the market? My inartfully expressed thought is simply that the strongest are likely to survive if there is somewhat less activity. They could still remain fully, and gainfully, employed. There would just be fewer overall projects. Consolidation of the industry seems a likely scenario--witness the FLC/RB combo and the rumored acquisition strategy. If this makes no sense, forgive me. I have a terrible headache. It's been a loooooong day. mph

To: Bob A Louie who wrote (4767)	12/10/1997 9:45:00 PM
From: Big Dog	Read Replies (2) \| Respond to of 95453

<<Texaco had planned capital spending of $3.5 billion in 1997, but overspent that by $300 million, the company said. Texaco has a total capital budget of $4.6 billion for 1998 and plans $26 billion for 1998-2002, of which 70 percent will go on the upstream sector, 26 percent on the downstream and 4.0 percent for other items. >> My notes: Planned capital spending for 1997 = 3.5 B Actual total capital spending for 1997 = 3.8 B Total capital budget for 1998 = 4.5 B 26 B divided by 5 yrs ('98-'02) = 5.2 B per year, or 0.7 B more than even budgeted for '98 4.5 ('98 budget) - 3.8 ('97 actual spending) = 0.7 B MORE than 1997 Please note that every year the majors (and minors I assume) make a new 5-yr budget with adjustments for the out years. Plus they over or under spend every year durin ghte course of the year as indicated above.