NEW YORK -- The chairman of Chevron Corp., which acquired Gulf Oil Corp. in the largest merger in U.S. history, warned Tuesday that corporate raiders could force the oil industry to halt exploration activities.
San Francisco-based Chevron purchased Gulf for $13.2 billion last April after the Pittsburgh oil giant put itself up for sale to avoid a hostile takeover bid by maverick oilman T. Boone Pickens Jr., a catalyst for several major oil industry mergers.
'Pickens has taken advantage of fairly natural forces in the consolidation of the oil industry,' Chevron Chairman George Keller told a news briefing.
Keller said mergers are an outgrowth of the overbuilding in the oil industry that occurred before U.S. oil demand plummeted in the early 1980s, compelling companies to close refineries and marketing outlets.
With the stock market currently undervaluing oil companies' assets, corporate marauders like Pickens have used takeover threats to drive up stock values on behalf of themselves and other oil industry shareholders.
'But I would worry more if the industry should respond by stopping all exploration efforts,' said Keller.
Oil companies could ward off unwanted takeovers by cutting off funds earmarked for exploration to bolster the value of their stock, he said.
Keller also pointed out that corporate raiders are forcing a restructuring of the oil industry among the least resistant companies, whose stock is selling far under their asset worth.
'The stock market is looking overwhelmingly at the short-term,' he said.
Keller said the combined Chevron-Gulf company has allotted slightly more than $5 billion for capital, exploration and production spending in 1985, down from about $5.5 billion for both firms in 1984.
Chevron, which wanted Gulf primarily because of its domestic oil, gas and chemical asssets, plans to spend more than 70 percent of its exploration and production budget in North America this year, he said.
'Our 1985 earnings will be in the same ball park as last year if international crude oil prices hold at current levels and if there is a modest increase in refining and marketing margins,' he said. 'The cost of the merger will offset most of Gulf's contribution.'
In 1984 Chevron earned $1.59 billion, or $4.65 a share, on revenues of $29.18 billion.
Keller said the combined Chevron and Gulf payroll has been reduced from 60,000 to 40,000 employees by early retirement programs, the sale of some assets and natural attrition.
Further staff reductions will be made -- particularly in the combined refining and marketing area with surplus capacity of about 300,000 barrels a day -- now that both partners can exchange market information following final government clearance of the merger last week, he said.
