The actions taken today are expected to reduce pretax costs by approximately $20 million per year. The lower costs stem from making broad organizational changes to eliminate unnecessary work processes and reconfiguring Unocal's Gulf Region unit to meet current and future business needs.
The restructuring measures will involve about 200 layoffs from the Gulf Region workforce in its Sugar Land office and field locations. The cuts represent about 7 percent of Unocal's total U.S. workforce.
"The difficult steps we took today are part of a restructuring that will have a long-term positive impact for our business unit, its employees and for Unocal overall by equipping us to succeed in a new and challenging business environment," said Ken Butler, Gulf Region vice president.
"It's unfortunate when restructuring affects people's jobs," he said. "We are committed to handling this situation with dignity and respect for everyone affected."
The part of the restructuring program to generate improved exploratory results has been under way since late last year. The focus of the exploration program has been redirected from the Gulf of Mexico's mature shallow depths to the emerging "deep shelf" play, which represents a new frontier for the industry.
Butler said the restructuring also would involve the divestment of properties by year-end that are marginal to Unocal. The divestments will allow Gulf Region to concentrate its efforts on more profitable fields and high impact exploration prospects. The impact of the asset sales on production and reserves is expected to be minimal.
Unocal expects to record a non-cash special item charge of approximately $12 million aftertax for the restructuring program in the second quarter 2002.
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