Equitable Resources Inc. is recording a total of $120 million inrestructuring-related charges, the company said Tuesday, in acontinuing effort started by company CEO Murry Gerber to focus oncore capabilities. Half of the charges will be accumulated becauseof severance, staff reductions and extinguishment of debt.Equitable expects a 20% employee reduction compared to mid-1998staff levels. The other half of the charge is a result of thedevaluation and consequent write-down of selected Gulf region gasand oil properties due to low commodity prices. Overall, Equitableexpects the measures to reduce annual expenses by $20 million in1999.

“Equitable Utilities is reducing its staffing level to achieve amore competitive cost structure in its distribution and interstatepipeline operations, while improving efficiency and maintainingsystem reliability.” Equitable said.

Gerber assumed his current post last June after Equitablesearched 10 months for a permanent CEO to replace the interimposition-holder, Donald Moritz. Since Gerber’s arrival, Equitablecompleted several asset sales, including the 2,000-mile LouisianaIntrastate Gas (LIG) pipeline and the Jefferson Island storagefacility. The pipeline and the storage facility were sold earlierthis month to American Electric Power for $320 million.

Equitable’s restructuring efforts also have led to thereorganization of its production and marketing divisions.Equitable’s production outfit, which used to be called ERI Supplyand Logistics, has now split into two sections: Equitable-EastRegion for its Appalachia business and Equitable-Gulf Region forits activities in the Gulf. Management was realigned according tothe split. All the company’s marketing operations and Noresco,Equitable’s energy management firm, were incorporated into adivision named Equitable Services.

“I think Equitable is right-sizing itself,” said Donato Eassey,an analyst at Merrill Lynch. “They aren’t headed towardsliquidation, and Gerber is taking this opportunity to focus thecompany.” Eassey added that he doesn’t expect Equitable to add toits portfolio until after it sees how well the clean-up works.

Equitable said that the cost saving measures were part of aprogram to “realize a more competitive cost structure in all of itscore businesses. These include its Appalachian oil and gasexploration and production, the Equitable Natural Gas utility,which serves 250,000 customers in southwestern Pennsylvania, andits energy management ventures. Equitable Resources is anintegrated energy company with over 1,600 employees. For the ninemonths ended Sept. 30, revenues fell 3% to $627.7 million. Netincome from continuing operations fell 14% to $29 million.

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