Unocal Corp. said it will cut about 200 positions from its Gulf Coast region exploration and production operations, which will reduce its total work force by about 7%, as part of a restructuring operation designed to improve its overall cost structure and profitability and better position the unit for ongoing exploratory success. The program also is expected to include some asset sales in the region by the end of the year.

The actions are expected to reduce pretax costs by $20 million per year. Unocal expects to record a non-cash special item charge of $12 million after tax for the restructuring program in the second quarter 2002. The lower annual costs stem from organizational changes made to eliminate unnecessary work processes and reconfiguring Unocal’s Gulf Region unit, the company said.

“The difficult steps we took today are part of a restructuring that will have a long-term positive impact for our business unit, its employees and for Unocal overall by equipping us to succeed in a new and challenging business environment,” said Ken Butler, Gulf Region vice president.

The part of the restructuring program to generate improved exploratory results has been under way since late last year. The focus of the exploration program has been redirected from the Gulf of Mexico’s mature shallow depths to the emerging “deep shelf” play, which represents a new frontier for the industry.

Butler said the restructuring also would involve the divestment of properties by year-end that are marginal to Unocal. The divestments will allow Gulf Region to concentrate its efforts on more profitable fields and high impact exploration prospects. The impact of the asset sales on production and reserves is expected to be minimal.

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