Conoco plans to eliminate nearly a thousand positions in 1999due to low oil prices and a need to improve operational efficiency.The layoffs will result in a $50 million after-tax charge againstConoco’s fourth quarter earnings, the company announced Tuesday.Conoco also said it was reducing its 1999 capital budget by $500million to $1.8 billion.

“We are expediting these plans to position the company to dealwith the lingering problem of low crude oil prices,” said ArchieDunham, CEO. Oil prices are trading near 12-year lows. “Conoco willfurther reduce costs by combining some functions in the UnitedStates and by more broadly sharing services and more effectivelydeploying our employees. Regrettably, these actions will result infewer jobs.”

The layoffs will take place primarily in Conoco’s upstreambusiness. The company currently employs 16,000 regular workers andover 27,000 full-time equivalent contractors worldwide. Conocoexpects the cuts to result in annual savings of $60 million.

“The actions we are taking are consistent with our strategicplan to improve the efficiency of our operations and take advantageof the synergies created by the continuous upgrading of our assetportfolio,” Dunham said.

The 1999 budget reduction will not affect long-term productiongrowth, Conoco said. At current price levels, the planned budgetcould support a growth rate of 6% for the year. The company’sworldwide exploration, production and natural gas efforts willreceive $1.3 billion from the 1999 budget, with the other $500million going to midstream and downstream activities. Conoco saidthe budget will focus on its deep-water acreage. In 1998, Conocosaid it had its most successful exploration program in 15 years interms of commercial discoveries.

More details concerning the budget and employment cuts will notbe disclosed until early 1999.

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