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Amerada Hess Cuts 400 Positions, E&P Spending

Amerada Hess Cuts 400 Positions, E&P Spending

Amerada Hess Corp. announced it will be chopping capital expenditures by $900 million next year from the $1.45 billion spent this year. It also plans to reduce its exploration and production work force by 400 positions, a 20% reduction in the U.S. and the U.K., resulting in $18 million in annual savings after taxes.

In addition, Hess plans to identify certain non-strategic petroleum marketing assets for sale as part of its continuing effort to improve returns on refining and marketing.

Exploration expenditures will decline by 40%, from over $400 million in 1998 to $250 million in 1999. Exploration drilling is estimated at 30 wells in 1999 compared to 66 in 1998. In addition, the successful completion of several major oil and gas field developments will decrease the company's development expenditures from $700 million in 1998 to $470 million in 1999. The new field completions are expected to increase Hess' production 25% next year to 85,000 barrels per day and another 20%, or by 75,000 bbl, in 2000. The production increases and cost reduction initiatives will result in a reduction in oil equivalent lifting costs and general and administrative expense in 1999 by $1.25/bbl compared to 1997.

Amerada Hess will record a $150 million after-tax charge in December covering its exploration and production operations, bringing charges for the year to a total of $300 million.

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