ATC Atlantic Coal

RNS No 0010e
ATLANTIC RICHFIELD COMPANY
29th July 1997
  
 
ARCO REPORTS 2ND QUARTER EARNINGS, HIGHER PRODUCTION
 
Los Angeles, July 28 - ARCO (NYSE: ARC) today reported 1997 second quarter net
income of US$390 million, or $1.19 per share, compared with 1996 second
quarter earnings of $434 million, or $1.33 per share.
 
The previously announced extraordinary after-tax charge of $118 million for
early retirement of debt was offset by the reversal of reserves for taxes and
related interest which primarily resulted from the partial resolution of
certain federal and state income tax audits.
 
Overall E&P Production Volumes Grow,
Natural Gas Up 13%, Gasoline Sales Up 5%
 
ARCO Chairman and Chief Executive Mike R. Bowlin said the 1997 second quarter
reflected growth in both upstream production and refined products sales
volumes.
 
Oil and gas production rose by 5% led by a 13% increase in natural gas
production, while gasoline sales were up 5% and jet fuel sales volumes grew
9%.
 
Bowlin added, "Second quarter earnings were reduced by lower West Coast
refining margins and lower earnings from ARCO Chemical due to manufacturing
plant turnarounds and higher raw materials costs."
 
Growth Agenda Advanced
 
"In addition to year-to-year production gains, ARCO advanced its production
growth initiative in the second quarter," Bowlin said. "We won bids for four
oil blocks in Venezuela, which we see as one of the best areas in the world to
help meet our goals for growth in production, reserves and income. The four
blocks are expected to produce more than 800 million gross barrels of oil in
the next two decades. We also received the Venezuelan Congress' approval to
proceed with the Hamaca oil production and upgrading project."
 
In Alaska, ARCO and its partners approved a new project, Miscible Injectant
Expansion (MIX), that is expected to increase ultimate gross Prudhoe Bay crude
liquids recovery by about 50 million barrels and add incremental production of
20,000 barrels of liquids per day by late 1999. ARCO has an approximate 25%
interest in Prudhoe Bay liquids production.
 
In the refining and marketing segment, the recently-leased Thrifty Oil Co.
outlets were integrated into ARCO's retail network during the second quarter.
ARCO also announced it is expanding its retail marketing into British Columbia
with the expected acquisition of 52 Super-Save gas sites in the greater
Vancouver area. These actions were in line with ARCO's stated goal of growth
in its marketing and retail businesses.
 
E&P Earnings, Volumes Grow
 
In the 1997 second quarter, ARCO's worldwide exploration and production
operations earned $321 million after tax, compared with $309 million in the
same quarter of 1996 despite lower crude and liquids prices. Domestic and
international natural gas prices increased.
 
ARCO's international production grew by 30% compared with 1996, as a result of
strong sales from ARCO's Yacheng natural gas field offshore China, higher gas
production in the United Kingdom North Sea and new oil production in Algeria.
 
Refining And Marketing Volumes Grow
 
ARCO's refining and marketing segment had after-tax earnings of $66 million in
the 1997 second quarter, down from 1996's second quarter after-tax earnings of
$129 million. While earnings were lower than the year earlier period, ARCO's
refining and marketing results improved from the 1997 first quarter and the
1996 fourth quarter. The lower earnings were attributable to weak refining
margins as the West Coast experienced high operating rates by refiners and
high inventories. Jet fuel prices suffered due to significant imports to the
West Coast as well as high refinery production rates. In 1996, second quarter
product prices benefited from product scarcity due to problems at a number of
West Coast refineries.
 
Sales volumes for refined products showed healthy increases compared to the
1996 second quarter. ARCO's Los Angeles and Cherry Point refineries each
achieved record crude runs during the quarter. In addition to the integration
of more than 200 former Thrifty gas stations into its retail network, ARCO
added 20 new sites during the quarter.
 
Chemicals
 
After-tax earnings from ARCO's 82.5% interest in ARCO Chemical Company were
$38 million, compared with $75 million in the 1996 second quarter. Increased
volumes and margins in ARCO Chemical's core propylene oxide business were more
than offset by higher costs due to plant turnarounds, the expiration of a
number of fixed fee MTBE contracts and the impact of higher raw materials
prices on other products. During the second quarter, ARCO Chemical launched a
cost reduction program targeting savings of $150 million per year, starting in
1998.
 
ARCO earned $46 million from its 49.9% equity interest in Lyondell
Petrochemical Company in the 1997 second quarter, compared with $7 million the
same quarter of 1996.
 
Other Items
 
ARCO's 2-for-1 stock split and a 4% increase in the quarterly dividend became
effective June 13 to stockholders of record on May 16, 1997. Earnings per
share have been adjusted for 1996 and 1997 to reflect the stock split.
 
Atlantic Richfield Company
Consolidated Statement Of Income
(Unaudited)
 
(Millions except per share amounts)
Three Months Ended     Six Months Ended
                                  June 30              June 30
                             1997       1996       1997        1996
REVENUES
Sales and other
operating revenues            $4,587     $4,559     $9,631      $8,715
Other revenues                   223        114        362         340
Total revenues                 4,810      4,673      9,993       9,055

EXPENSES
Trade purchases                1,990      1,866      4,222       3,540
Operating expenses             1,087        971      2,097       1,901
Selling, general and
administrative expenses          271        249        522         487
Depreciation, depletion
and amortization                 417        399        844         803
Exploration expenses (including
undeveloped leasehold
amortization)                     90        107        216         207
Taxes other than income taxes    177        194        408         411
Interest (a)                       8        167        174         340
Unusual items                     --         --         --          26
Total expenses                 4,040      3,953      8,483       7,715

Income before income taxes,
minority interest &
extraordinary item               770        720      1,510       1,340
Provision for taxes on income    243        261        479         481
Minority interest in earnings
of subsidiaries                   19         25         40          55
Net Income before
extraordinary item               508        434        991         804
Extraordinary item - loss on
extinguishment of debt (net of
income taxes of $74 million)    (118)        --       (118)         --
Net income                      $390       $434       $873        $804

Earned per share (c):
Income before
extraordinary item             $1.55      $1.33      $3.02       $2.46
Extraordinary loss             (0.36)        --      (0.36)         --
Net income                     $1.19      $1.33      $2.66       $2.46
Weighted average equivalent
shares outstanding (c)       328.1(b)   326.7(b)     328.0       326.6
Dividends per common share (c)$0.7125    $0.6875   $1.4000     $1.3750
 
(a) Excludes capitalized interest of $15 million and $7 million for the
three-month periods and $18 million and $12 million for the six-month periods
ended ended June 30, 1997 and 1996, respectively.
 
(b) The common shares including equivalents outstanding at June 30, 1997
and 1996 were 328,020,233 shares and 326,685,488 shares.
 
(c)Prior year share and per share data is restated for the effect of the
second quarter l997 100% stock dividend.
 
AFTER-TAX SEGMENT EARNINGS
(Unaudited)
(Millions)
                            Three Months Ended      Six Months Ended
                                 June 30                June 30
                                  1997      1996        1997        1996
Exploration and production       $321       $309       $773        $602
Refining and marketing             66        129        110         157
Chemicals                          38         75         88         172
Coal                               24         22         47          27
Equity in earnings from Lyondell   46          7         76          19
Unallocated expenses and other     29          5         25          57
Interest                          (16)      (113)      (128)       (230)
Extraordinary item - loss
on extinguishment of debt        (118)        --       (118)         --
Net Income                       $390       $434       $873        $804
 
Note to Editors: ARCO Chemical Company (NYSE: RCM) reported earnings on July
21; Vastar Resources, Inc. (NYSE: VRI) announced earnings on July 23; Lyondell
Petrochemical Company (NYSE: LYO) reported earnings today. For a menu of ARCO
news releases and prior quarterly/annual financial information, visit ARCO at
http://www.arco.com/
 
UNS
Contact:  Media: Albert Greenstein, 213-486-3384; Investors: Steve
Enger, tel Los Angeles 001 213 486-1811.
 

END

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