Unocal, Mobil to Cut Capital Spending

Unocal Corp. and Mobil Corp. became the latest major oil companies to announce cuts in 1999 capital spending because of persistently weak oil prices. Their announcements came hard on the heels of warnings from Exxon Corp., San Francisco-based Chevron Corp. and Texaco Inc. that a $9-a-barrel drop in oil prices in the fourth quarter of 1998, to an average of $14, would severely curb spending. Mobil President and Chief Operating Officer Eugene Renna said Mobil next year will spend less than the projected 1998 capital budget of $5.9 billion. Unocal’s capital spending cut was more dramatic: 30% to 40% lower than the $1.65 billion expected for this year. El Segundo-based Unocal will also look hard at its savings, and Chairman and Chief Executive Roger Beach said the company will cut costs by $150 million, of which $100 million has already been identified. Unocal has been hit especially hard by the drop in oil prices, as it does not have the refining base of other large oil companies. Its cash flow in the first nine months of this year fell to $1.1 billion from $2.88 billion a year ago. In New York Stock Exchange trading, Unocal shares fell 19 cents to close at $33.81; Mobil was off 6 cents at $71.81.