In an effort to reach higher post merger goals, ChevronTexaco now estimates it will reduce its work force by 4,500 rather than 4,000 announced last month. The move is part of a program designed to produce savings of $1.8 billion by March 2003 ($1.2 billion of it in six to nine months) and a 2-3% increase in return on capital employed in 2003-2004. The company also said it is expecting long-term production growth of 2.5-3% over the next five years.

CEO David J. O’Reilly said the biggest increase in synergies is expected in the downstream sector. “Our thinking about downstream has advanced,” said O’Reilly, “so that even without overlap we’ve found considerably more synergies by integrating on a global basis businesses that were previously operated regionally.”

Through merger integration planning, workforce reductions are expected to number 500 more than projected in the October 2000 merger announcement and reach 4,500 out of 57,000 employees.

Commenting on ChevronTexaco’s recent decision to invest $2.5 billion more in Dynegy as that company plans a merger with Enron, O’Reilly said the decision reflected a strategy to increase investment in the growing energy convergence marketplace. “Our participation offers a combination of significant upside potential and terms that will protect our investment,” he said. “And, we have full confidence in Dynegy’s disciplined management approach to complete the merger and to build a new company into an industry leader.” ChevronTexaco has an equity interest in Dynegy of about 26%.

The company is the third largest energy company in terms of global oil reserves (8.5 billion barrels) and fourth largest in global oil and natural gas production (2.7 million barrels/day). It has capacity to refine more than 2.2 million barrels per day, sells more than 3.5 million barrels of refined products daily and has more than 25,000 retail outlets under the Chevron, Texaco and Caltex brands.

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