LOS ANGELES, Feb. 7, 2000 (PRIMEZONE) -- ARCO (NYSE:ARC) announced today that it replaced 129% of its consolidated worldwide oil and gas production in 1999, increasing its proved reserve base to 4.6 billion barrels of oil equivalent (BOE) at the end of 1999. At the same time, ARCO said its budget for 2000 anticipates about $2.6 billion in capital spending, down from $2.7 billion spent in 1999.
"Our goal for the past four years has been to replace, on average, 120% of annual production, and the 1999 reserves replacement is right in line with that target. It also reflects that our focus has been - and continues to be -- on operating ARCO as ARCO until we complete our planned merger with BP Amoco," Bowlin said. "As reported last month, we exceeded our cost reduction targets and made significant progress during 1999 in our portfolio realignment. All of that makes our reserves replacement even more significant."
Starting 1999 with 4.5 billion BOE, the company produced and consumed 388 million barrels and sold 103 million barrels. ARCO more than offset those reductions by adding more than 600 million barrels through revisions, extensions and discoveries, improved recovery and purchases.
Significant reserves additions came from Vastar Resources, Inc., in which ARCO holds an 81.9 percent interest; from Southeast Asia, Latin America and Alaska. Vastar added 127 million BOE, replacing 170% of its 1999 production. In Southeast Asia, where ARCO and its partners signed a gas sales agreement for a field in the Malaysia-Thailand Joint Development Area, ARCO added 76 million BOE, and in Venezuela, the combination of ARCO's increased interest in the LL652 field and revisions contributed 82 million barrels.
In Alaska, ARCO added 65 million BOE of reserves at the Kuparuk field as a result of improved recovery and revised estimates. The 1999 Fiord and Aurora discoveries added 40 million BOE and 12 million barrels were added for revisions at the new Alpine field.
ARCO Alaska replaced 139 percent of its reserves, making this the third consecutive year ARCO has replaced its annual production in Alaska.
ARCO's total resources remained flat with 1998 estimates of 12 billion BOE. Deletions from asset sales and production were offset by additions from exploration, acquisitions and trades, and revised estimates.
PLANNED ADDS TO FIXED ASSETS FOR 2000
ARCO plans to spend approximately $2.6 billion on additions to fixed assets in 2000, down from 1999 spending of $2.7 billion.
Of the total $2.6 billion capital budget for 2000, ARCO plans to spend $2.15 billion on upstream investments and the remainder on the downstream. "This capital program again reflects ARCO's narrowing focus in international upstream operations," Bowlin said. Accordingly, $800 million of the upstream capital will be spent internationally while $1.4 billion will be spent on domestic upstream operations.
The U.S. investments include $900 million for the Lower 48 program (including $850 million for Vastar), and $475 million in Alaska. Downstream investments include $425 million for refining and marketing and $25 million for other operations.
Key expenditures in the 2000 budget include completion of the Alpine field development on the North Slope of Alaska, completion of the Shearwater field development in the Central North Sea, development of the gas resource in the Gulf of Thailand and the Muriah gas field in Indonesia. In the downstream, construction of new marine tankers and expansion of the joint venture Seaway Pipeline in the mid-continent are the most significant budget components.
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Editor's Note: Some of the matters discussed in this news release are forward-looking statements that involve risks and uncertainties. Actual results, including the ultimate level of 2000 capital spending and the completion of development plans 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 Securities and Exchange Commission (SEC) reports. The timing of the closing of the combination with BP Amoco is subject to the timing of governmental reviews, and the timing and outcome of judicial challenge by the Federal Trade Commission (FTC). Unless otherwise noted in the statements, ARCO does not intend to update such forward-looking statements.
(Cautionary Note to Investors - the SEC only permits oil and gas companies to disclose in their filings with the SEC those reserves classified as proved, i.e., reserves that are economically and legally producible under existing economic and operating conditions. In this press release we use the term "total resources" which include proven, probable and potential reserves and which SEC guidelines strictly prohibit using in the SEC filings. Investors are urged to consider the reserve disclosure in our 1998 report on the Form 10-K.)