U.S. COMPANIES KEEP TIGHT REIN ON 1993 CAPITAL BUDGETS

The U.S. petroleum industry is approaching 1993 with a cautious hand on budgets.

That's apparent in spending plans disclosed last week by Amoco Corp., Phillips Petroleum Corp., Sun Co., and Consolidated Natural Gas Co. (CNG).

Amoco plans to spend $3.2 billion for capital and exploration items in 1993, essentially flat with its 1992 budget. Ahead for next year: an accent on non-U.S. exploration and production.

Phillips' board of directors approved a $1.2 billion capital and exploration budget for 1993. That's up a little more than 2% from estimated 1992 spending of about $1.17 billion, including $153 million to help rebuild the Houston Chemical Complex (HCC). It was heavily damaged by an October 1989 explosion and fire. By yearend 1992 the rebuild and expansion of the HCC polyethylene plant will be almost complete, hiking Phillips' polyethylene capacity to 1.8 billion lb/year.

Sun directors approved a 1993 capital program of $755 million, a 36% increase from projected capital spending in 1992 but 5% less than what had originally been budgeted for 1992. The 1993 budget includes $160 million in investments intended for the value-added segments of Sun's core refining/marketing business: branded marketing, lubricants, chemicals, and logistics.

Directors trimmed CNG's 1993 budget to $344 million from 1992's $426 million. The cut stemmed largely from completion of major interstate gas pipeline construction projects by the company's CNG Transmission Corp. unit.

AMOCO SPENDING PLANS

Amoco plans to spend the biggest part of its 1993 budget for oil and gas exploration and production, with about 70% of E&P outlays targeted outside the U.S.

Noteworthy among 1993 spending items are completion of several major offshore projects, including completion of the Central Area Transmission System and start-up of Scott field, both in the U.K. North Sea, start-up of P-15/18 gas field development off the Netherlands, and start-up of Immortelle gas field off Trinidad.

"Although we anticipate flat prices for crude oil and only somewhat higher prices for natural gas, we're confident we can maintain our current level of capital spending," said Amoco Chairman H. Laurence Fuller. "This is largely true because the cost-cutting program we started earlier this year is yielding significant results."

Amoco expects to realize $600 million in pretax savings in 1993 from the cost-cutting program, although inflation will partly offset some of those savings.

"Our efforts to reduce expenses are improving our financial performance," Fuller said. "But we are not satisfied and will continue efforts to drive down costs."

Amoco expects to drill about 50 exploratory wells in 1993, with about 90% of them outside the U.S. Fuller said the company expects to sell and acquire some producing properties during 1993 in a continuing effort to increase operating efficiency and reduce costs.

Amoco is earmarking a significant portion of its 1993 budget for environmental projects, including:

Diesel desulfurization projects at the company's Texas City, Tex., and Whiting, Ind., refineries, in addition to other environmental projects at those plants.
Air and water emissions projects at petroleum terminals, plus Stage 11 vapor recovery systems at service stations.
Improvements in its pipeline system.

PHILLIPS 1993 FOCUS

Phillips said its 1993 focus will be on meeting safety and environmental needs, profitably replacing oil and gas reserves, profitably repositioning its natural gas liquids business, improving financial performance in refining, marketing, and chemicals, and improving financial flexibility.

Almost 75% of the 1993 budget will go for upstream projects, reflecting "continued emphasis on funding petroleum reserve replacement and development opportunities while maintaining downstream assets."

Included in the 1993 budget is $129 million to cover the final payment for liquefied natural gas tankers operating out of Alaska. That sum is classified as exploration and production.

Major development projects for 1993 lie in Embla field off Norway, the "J" block and Ann fields off the U.K., Xijiang field off China, and Nigeria's Ogbainbiri field.

The E&P budget includes $138 million for exploration, with most of the money earmarked for prospects near existing operations that have potential for rapid development. About one third of exploration dollars will be spent on potential large reserve, high reward frontier prospects. Exploration spending is to be split 44% U.S., 56% non-U.S.

Key wildcats will be drilled in in Alaska, Australia, Norway, the U.K., Italy, and Egypt.

Funds for the 1993 budget will come from continuing operations and the sale of assets. About $150 million in asset sales were booked in 1992.

SUN'S PROGRAM

Sun's 1993 spending program includes leqally required refining and marketing projects deferred in 1992.

Sun is targeting its capital spending for international upstream activities on production and development work, in keeping with its recent decision to pull out of exploration activity outside of Canada.

Of 1993 budgeted outlays, $245 million is earmarked for Suncor, Sun's Canadian subsidiary. Suncor plans major outlays to convert its oilsands operations to truck and shovel mining from the bucketwheel method currently in use. In the wake of a recent restructuring, Sun is focusing on U.S. refining and branded marketing, chemicals, lubricants, and logistics. The company's real estate holdings and coal assets are for sale.

CNG BUDGET

CNG plans to spend about $120 million for exploration and production, $112 million for gas transmission, and $111 million for gas distribution.

That compares with a 1992 capital budget of $426 million.

"With our multiyear expansion program in gas transmission now substantially in place, we're increasing considerably our participation in the growing market for natural gas in the Northeast and Middle Atlantic regions," said CNG Chairman George A. Davidson.

"In 1993, our capital budget will allow for more normal levels of new gas and oil drilling, with a stronger emphasis on exploration as well as growth in investment base at our local gas utility subsidiaries."