SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 25, 1999
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ATLANTIC RICHFIELD COMPANY
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-1196 23-0371610
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(Commission File Number) (IRS Employer
Identification No.)
515 South Flower Street, Los Angeles, California 90071
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213) 486-3511
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
Press Release, dated January 25, 1999, reporting ARCO's
1998 Fourth Quarter and full year earnings results.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
ATLANTIC RICHFIELD COMPANY
/s/ ALLAN L. COMSTOCK
________________________________
Allan L. Comstock
Vice President and Controller
Dated: January 26, 1999
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ARCO [LOGO] Media Relations N E W S
515 South Flower Street
Los Angeles, California 90071-2201
Telephone 213 486 3384
Facsimile 213 486 0169
For Release: 6 am PST January 25, 1999
ARCO REPORTS 1998 FOURTH QUARTER, FULL YEAR RESULTS
LOS ANGELES --- ARCO (NYSE: ARC) reported a 1998 fourth
quarter net loss of $794 million, or $2.47 per share,
after a net charge of $864 million. The net charge reflects
asset writedowns, restructuring costs and a tax refund. In
the 1997 fourth quarter, ARCO earned $382 million, or
$1.17 per share.
Before the special items, ARCO earned $70 million,
or $0.22 per share, for the quarter as operating results
continued to reflect the effects of weak commodity pricing.
Compared to the same quarter last year, average crude oil
prices declined $7 per barrel.
For the full year of 1998, ARCO reported net income
of $452 million, or $1.40 per share, down from $1.77
billion, or $5.41 per share, in 1997. Excluding special
items and discontinued operations, 1998 earnings totaled
$400 million, or $1.24 per share. On the same basis, the
1997 earnings were $1.33 billion, or $4.06 per share.
BAD YEAR FOR OILS, YEAR OF STRATEGIC PROGRESS
"There is no question this was a bad year for oils.
We started the year with oil prices in the high teens and
saw them drop to an $11 dollar average in December, a 30-
year low when adjusted for inflation," Mike R. Bowlin, ARCO's
Chairman and Chief Executive Officer, said. "Notwithstanding
this situation and
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1998 EARNINGS
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the resulting near-term financial impact, we made
tremendous strategic progress over the past 12 months."
During 1998, ARCO made significant strides to implement its
strategy to focus on the oil and gas business. This strategy
consists of divesting non-core businesses, geographically
focusing oil and gas operations, and investing in key focus areas.
In line with this approach, the company sold interests in ARCO
Chemical Company and U.S. coal assets. Agreements were recently
reached to sell interests in most of its Australian coal properties.
The company plans to continue to divest other non-core assets.
ARCO also achieved significant progress in efforts to
geographically focus its operations during 1998. To enhance ARCO's
position in the Gulf of Mexico, the company swapped its heavy oil
properties in California for assets in the Gulf of Mexico. Those
assets were subsequently sold to Vastar Resources, Inc. (in which
ARCO holds an 82.1% interest).
ARCO purchased the assets of Union Texas Petroleum (UTP), which
strengthened its position in four key focus areas - Alaska, the North
Sea, Indonesia, and Venezuela. Given the overlap between ARCO
and UTP, the company is beginning to realize significant cost savings
as a result of office consolidations and other efficiencies.
Additionally, ARCO improved its Asia gas resources through its purchase
of interests in a 10+ trillion cubic feet (Tcf) gas resource in the
Joint Development Area between Malaysia and Thailand. The
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1998 EARNINGS
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company obtained a 25% working interest at an exceptionally low
entry cost of $.06 per million cubic feet (Mcf).
In December 1998, the company announced 1999 capital spending
would be reduced to $2.7 billion, down approximately 25% from
spending in 1998.
ARCO is currently implementing a two-year $500 million
global cost reduction program. The savings will come from
significantly streamlining its upstream efforts through personnel
cuts, closing international offices, reducing exploration and
corporate overhead expenses, and continuing the cost reduction
efforts underway in its refining and marketing business unit.
WORLDWIDE OIL AND GAS PRODUCTION GROWS
On a barrel of oil equivalent basis, ARCO's production grew
by 12% for the quarter, compared to 1997, reflecting the new
production acquired in the Union Texas acquisition and new
field startups in the United Kingdom North Sea. International
natural gas production was up 51% primarily due to the UTP
acquisition and increases in the UK North Sea while domestic
natural gas production grew by 21% as Vastar production grew by 27%.
ARCO's worldwide exploration and production operations for the
1998 fourth quarter earned $74 million after tax but before charges of
$833 million related primarily to asset writedowns and restructuring.
In the 1997 fourth quarter, exploration and production operations
earned $308 million before charges of $22 million.
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1998 EARNINGS
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ARCO's domestic petroleum liquids prices averaged $9.08 per
barrel, down from $14.84 per barrel, in the 1997 fourth quarter. At
the same time, the company's U.S. natural gas prices averaged $1.75
per thousand cubic feet (Mcf) compared with an average of $2.23
per Mcf in 1997's fourth quarter.
For the full year, ARCO's production grew by 4%. In addition
to the UTP production, the company also started up three new
satellite fields in Alaska (Tarn, Tabasco, and Midnight Sun), and
four fields in the UK North Sea (Britannia, Waveney, Deben, and
Bure West). Additional upstream achievements in 1998 include
starting development drilling of the Alpine field in Alaska and
the Shearwater field in the North Sea (both of these fields will
start up in 2000). On the exploration front, ARCO increased the
proved, probable and possible reserves of the Indonesian Tangguh
field to 21.3 Tcf, and through its Vastar subsidiary, experienced
exploration success in the Gulf of Mexico deepwater.
REFINING AND MARKETING
The company's refining and marketing segment earned $57 million
after tax in the 1998 fourth quarter, compared to 1997 fourth quarter
after-tax earnings of $75 million, which included a $38 million net
special charge. Lower light product margins versus the same
quarter last year primarily accounted for the lower earnings.
During 1998, the refining and marketing business recognized
some notable accomplishments which included accelerating progress
on cost savings
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1998 EARNINGS
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efforts; growing retail volumes by 9% for the year; and forming
a joint venture with Itochu to establish the first polypropylene
plant on the West Coast.
OTHER OPERATIONS
Other operations, predominantly ARCO's Lower 48 pipelines
and aluminum business, contributed after-tax earnings of $22
million before charges of $9 million in the 1998 fourth quarter,
compared with $24 million before a benefit of $1 million in the 1997
fourth quarter.
DISCONTINUED OPERATIONS
After-tax losses from discontinued operations (Australian coal,
ARCO Chemical Company and UTP petrochemical operations) totaled
$1 million before charges of $41 million in the fourth quarter.
In the 1997 fourth quarter, these operations (US and Australian
coal and ARCO Chemical) earned $68 million before a net special
charge of $10 million.
SPECIAL ITEMS
The 1998 fourth quarter included a net special charge
of $864 million, down from the previously reported expected charge
of $890 million. The special items included approximately $750
million for asset writedowns primarily as a result of lower
expected oil prices and $170 million for the costs of ARCO's
global cost reduction program. The properties involved include
some assets acquired as part of the UTP purchase and other
assets in the UK North Sea, Middle East and North Africa. These
charges were partially offset by a $56
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1998 EARNINGS
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million net benefit that included a tax refund in excess of
$100 million and other charges.
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For further information, contact: News Media: Linda Dozier
(213) 486-3384; Investors: Eden Warner (213) 486-1511 or
David DeSonier (213) 486-1811. This news release and all other
releases can be found at http://www.arco.com.
[Some of the matters discussed in this news release are forward-
looking statements that involve risks and uncertainties. Actual
results could differ materially based on numerous factors,
including the realized level of crude oil and natural gas
production and other risks detailed from time to time in the
company's reports to the Securities Exchange Commission, including
the 1997 report on Form 10-K.]
