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Occidental to Consolidate U.S., Global Energy Units : Restructuring: Company says move will result in savings of $100 million a year. Hundreds of jobs expected to be lost.

October 26, 1995|PATRICK LEE | TIMES STAFF WRITER

As part of its continuing effort to cut costs and sharpen its business focus, Occidental Petroleum Corp. said Wednesday that it will consolidate its far-flung U.S. and international oil and gas operations into a single unit to be based in Bakersfield.

The consolidation, to be finalized by mid-January, will result in an estimated $100-million annual savings, an undetermined charge in the fourth quarter and the closure of offices in Oklahoma City and Houston, the company said.

Occidental did not say how many jobs will be eliminated, but sources said the figure will run "into the hundreds." The company has about 6,600 employees in its oil and gas operations worldwide.

The restructuring will not affect Occidental's corporate headquarters in Westwood or its 350 employees there, the company said.

The restructuring will consolidate Oxy USA and Occidental International Exploration & Production Co. into the existing Occidental Oil & Gas Corp., to be headed by that unit's president, David R. Martin.

About 80% of the $100 million in cost savings will be realized in 1996, with the remainder in 1997, the company said.

Analysts praised the announcement, and Occidental's stock rose 75 cents per share to $21.875 in trading on the New York Stock Exchange.

"It's . . . indicative of . . . their emphasis on increasing shareholder value," said Doug Terreson, international oil analyst with Morgan Stanley in New York.

The announcement represents the latest in a series of changes at the company since the 1990 death of its legendary chairman, Armand Hammer.

The company has eliminated or sold off many of the ancillary businesses developed under Hammer's tenure, from meatpacking and horse breeding to baking soda and coal operations in China.

From a high employment of 55,400 at the end of 1990, the company has shrunk its work force to 19,600 at the end of last year.

Under Chairman Ray R. Irani, the firm is focusing more than ever on its core businesses of oil, gas, chemicals and natural gas pipelines.

More important, the company has pared its long-term debt from a high at the end of 1990 of about $8 billion to $5.8 billion at the end of last year, and $5.2 billion now, a company spokesman said. Terreson said he expects that debt to be reduced by another $1.3 billion by July, 1997.

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