As part of an ongoing portfolio optimization to improve operating efficiency in North America, ChevronTexaco
As a result of the sales and reorganizations, ChevronTexaco expects to take an immaterial charge against fourth-quarter earnings. Further, the company anticipates that it will retain nearly all of its current earnings, cash flow, and resource base, while improving overall competitiveness.
ChevronTexaco's plan will eliminate more than 60% of its U.S. properties, but only 5% of daily production. Most of these properties are non-operated joint ventures and royalty-only interests.
In western Canada, the company is considering divestiture of mature producing fields and midstream assets, which currently produce 35,000 barrels of oil-equivalent production per day. Notably, it will maintain its more important assets, including the Athabasca Oil Sands Project and MacKenzie Delta gas.
Over the long haul, ChevronTexaco expects to keep approximately 400 core fields.
In addition to the asset sales, the company will also reorganize some of its business units. The Permian Business Unit and MidContinent Business Unit will be consolidated and headquartered in Houston. Among other things, the Deepwater Gulf of Mexico Business Unit will now focus exclusively on exploration and major deepwater development projects and also be co-located with other ChevronTexaco worldwide deepwater and technology groups in Houston. Overall, the combined divestitures and reorganizations are expected to result in the elimination of 150 to 200 jobs.
Continued consolidation and moves to improve operational efficiency seem like logical next steps for a large conglomerate thrown together in a mean-merger. These moves should have at least a slight positive impact on earnings in the future.
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Jeff Hwang can be reached at Hwang@fool. com.