News Phillips Petroleum Company
Public Relations
Bartlesville, Oklahoma 74004
http://www.phillips66.com
CONTACTS: FOR IMMEDIATE RELEASE
Kristi DesJarlais (media) 918/661-6117 ---------------------
Howard Thill (investors) 918/661-4757
Phillips Completes Alaska Acquisition,
Revises Capital Budget
Company acquires remaining assets -- pipeline interests, tankers
BARTLESVILLE, Okla., Aug. 3, 2000 --- Phillips Petroleum Company
[NYSE: P] today announced it has completed its acquisition of ARCO's
businesses in Alaska. The $965 million second and final closing
completed Aug. 1 involves Phillips' acquisition of certain pipeline
interests and marine assets. The first closing occurred April 26 and
included ARCO's exploration and production assets in Alaska.
This closing brings the total cash paid and debt assumed for the
acquisition to just under $6.5 billion. Including the additional
payments Phillips may make to BP based on a formula tied to the price
of crude oil*, the total acquisition cost will be less than $6.9
billion.
Assets included in the second closing are a 22.3 percent interest in
the Trans Alaska Pipeline System, interests in other infrastructure
pipelines and three double-hulled tankers currently under construction.
Phillips paid $700 million in cash for these assets and assumed
$265 million in debt.
To reflect the completion of the acquisition, as well as the closing of
the joint-venture transactions in the company's chemicals and midstream
segments, Phillips has revised its 2000 capital budget to $2.3 billion,
excluding the approximately $6.5 billion for the Alaskan acquisition
and any payments tied to the price of crude oil. The original 2000
capital budget was $1.8 billion. The company's direct capital spending
programs for the midstream and chemicals segments ended at the close of
the first and second quarters, respectively.
"The acquisition in Alaska is a significant part of our strategy of
growing our exploration and production business," said Jim Mulva,
Phillips' chief executive officer. "As we demonstrated with our second-
quarter results, the acquisition has already had a substantial impact
on our upstream business and corporate financial position: doubling our
worldwide reserves, significantly increasing daily crude oil production
and playing a key role in our strong operating earnings performance.
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Phillips Completes Alaska Acquisition,
Revises Capital Budget
Page 2
"The company's debt balance, upon completion of the second closing and
including the debt assumed in this transaction, is less than
$8.1 billion, which shows continued improvement in our debt reduction
efforts relative to the end of the last quarter," Mulva continued. "We
expect to further decrease our debt and improve our debt-to-capital
ratio by year end, in keeping with our plan to continually improve our
financial position."
At the time of the first closing, it was announced that the Prudhoe Bay
Unit (PBU) equity interests of Phillips, BP and ExxonMobil would be
realigned and a single operatorship would be established. Phillips'
interest is approximately 36 percent. BP is operator of PBU, while
Phillips operates the Kuparuk and Alpine units -- the other major fields
on the North Slope.
Phillips is an integrated petroleum company engaged in oil and gas
exploration and production worldwide; gas gathering, processing and
marketing in the United States; refining, marketing and transportation
operations, primarily in the United States; chemicals and plastics
manufacturing and sales around the globe; and technology development.
Founded in Bartlesville, Okla., in 1917, the company had 14,800
employees, $20 billion of assets and $20 billion of annualized revenues
as of June 30.
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* Note: The acquisition agreement calls for Phillips to make
additional payments to BP during periods when the West Texas
Intermediate/New York Mercantile Exchange average monthly price for
crude oil exceeds $25 per barrel. These payments are subject to a
$500 million limit or a five-year term, and were effective Jan. 1, 2000.
Phillips has made payments based on this formula of approximately
$138 million related to the first six months of this year.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statements about Phillips'
exploration and production business, the acquisition of all of ARCO's
Alaskan businesses, Phillips' revised capital budget, and debt levels.
Where in any forward-looking statement, Phillips has expressed an
estimate, potential expectation or belief as to the future results,
such expectation or belief is expressed in good faith and believed to
have a reasonable basis. However, there can be no assurance that the
statement of expectation or belief will result or be achieved. The
actual results may be affected by a variety of risks, which could cause
the stated expectation or belief to differ materially. Some of the
important risk factors, but not necessarily all such factors that may
cause expectations or results to differ perhaps materially, are
contained in Phillips' reports with the Securities and Exchange
Commission ("SEC"). Copies of the company's SEC filings are available
by calling Phillips at 918-661-3700. These reports are also available
through Phillips' Web site at http://www.phillips66.com. Phillips
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undertakes no obligation to update the information in this release.
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