ATC Atlantic Coal

RNS No 4012t
ATLANTIS RICHFIELD CO
15th October 1998



ARCO   Public Affnirs
       515 South Flower Street
       Mailing Address: Box 2679-T.A.
       Los Angeles, California 90051
       Telephone 213 486 3511


ARCO Announces Cost Reduction Program

LOS ANGELES, Oct. 15 /PRNewswire/ -- ARCO (NYSE: ARC) today announced that
it will implement a cost reduction program designed to reduce before-tax costs
by more than $500 million over the next two years. Approximately $350 million
of the cost savings are expected in 1999.

The cost reductions will fall largely into four categories: upstream operating
and support costs; exploration spending; downstream operating and support costs;
and costs for the corporate center and support services. ARCO's increased
concentration on core exploration and production areas and the recent divesting
of non-strategic assets have facilitated the additional cost reductions. The
reductions include the elimination of approximately 900 administrative and
technical jobs, most of which are in Los Angeles and Plano, Texas. In addition,
the company will close 20 small offices, which are located primarily outside the
United States, and downsize a number of other offices.

IMPROVING RESULTS
"Our goal is to provide high returns to our stockholders," said ARCO Chairman
and Chief Executive Officer Mike R. Bowlin. "To do so, we must achieve best
quartile performance in everything we do. "A commodity business always needs to
control costs," he said. "In the oil price environment that could be with us
over the next few years, it is imperative that we continue to pay strict
attention to costs. Our cost reduction program goes beyond this and is designed
to insure the future financial success of ARCO in whatever business environment
evolves. In particular we want to improve our international profitability."

UPSTREAM COSTS
Upstream cost reductions are expected to comprise about $330 million of
the program's two-year commitment of $500 million. This includes approximately
$85 million of previously announced cost reductions that will be realized in
1999 as a result of the company's acquisition of Union Texas Petroleum. 

Of the $330 million, exploration spending will be reduced by $150 million, most
of it coming from the international area. Production costs will be reduced about
$110 million. Overseas office closures and reductions in the company's
international support operations in Plano, TX, will provide another $70 million
of the planned reductions. This will include upstream and support a staff
reduction of about 530 jobs, of which 450 jobs are in Plano. 

Commenting on the upstream reductions, Michael E. Wiley, President and Chief
Operating Officer said. "Earlier this year we began a restructuring of our
international activities to achieve best quartile costs and margins. We are
continuing that effort, although not at the expense of future international
growth. We are simply balancing our existing portfolio of international
projects, our costs and our business development activity with an eye to both
current conditions and future profitability."

"Fundamentally, we are seeking the same level of performance in our
international activities that we have achieved in ARCO's Alaska, Lower 48, and
Gulf of Mexico operations," he said. "All of these are best quartile
operators."

DOWNSTREAM COSTS
Downstream costs are expected to fall by about $90 million over the twoyear
period. Most of the reduction will be in refining and marketing and will volve
additional staff cuts of about 100. ARCO's refining and marketing division has
recently completed a profit improvement program that has already reduced costs
by $100 million versus 1997. ARCO, Wiley said, is recognized as one of the
premier refiners and marketers in the world.

CORPORATE AND SUPPORT COSTS
The corporate center and support staff costs will comprise $80 million of the
total cost savings of $500 million. This will involve reductions of about 270
people, all in Los Angeles. These corporate center and support cost reductions
are possible because of the cuts in upstream and downstream operations, the
company's greater focus on core businesses and the divestment of several
non-strategic businesses.

PERSPECTIVE
Putting the entire cost reduction program in perspective, Bowlin said, "We
are going to improve our profitability while maintaining our ability to grow.
We have an ample portfolio of growth projects. Our challenge now is to maximize
the value of that growth portfolio along with our existing assets. We are
committed to our strategy of being the best performer with significant scale in
selected regions."

Bowlin said that later this year the company will announce its plans for capital
spending as well as the sale of remaining non-strategic assets to complete the
restructuring it began in late 1997. In recent weeks ARCO has announced the
departure of a number of senior executives, the elimination of its corporate
aviation department and the likely consolidation of its Los Angeles basin
offices. 

As part of its strategic plan.  ARCO earlier this year sold its domestic ooal
operations and its interest in ARCO Chemical while acquiring the Union Texas
Petroleum Company. The company is highly focused on its core oil and as
businesses with significant operations in Alaska, the Lower 48, the Gulf of
Mexico, the United Kingdom North Sea, Indonesia, China, Venezuela and Algeria.

(Some of the matters discussed in this news release are forward-looking
statements that involve risks and uncertainties. Actual results could differ
based on numerous factors including the ability to achieve projected cost
reductions consistent with operating requirements, industry and general economic
conditions and other risks detailed from time to time in the company's reports
to the Security Exchange Commission, including the 1997 report on Form 10-K.)

ARCO releases are available at http://www.arco.com on the World Wide Web.

SOURCE ARCO

CONTACT: News Media: Lee Tashjian, 213-486-2364, or Tom Goff,
         213-486-3385, or Investors: David De Sonier. 213-486-1811, all of ARCO/
         /Web site: http:/www.arco.com/

END

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