A Cut Above

SAN FRANCISCOChevronTexaco Corp., operator of approximately 3,000 convenience stores, said it would cut 500 more jobs than expected and reaffirmed its goal for $1.2 billion in synergies in the wake of the merger of Chevron Corp. and Texaco Inc. last month.ChevronTexaco said job cuts will now total 4,500, or almost 8 percent, of the employees at both companies. The cuts are up from an original projection of 4,000. The company forecast recurring synergies at an annual rate of $1.8 billion by March 2003 and reaffirmed its original $1.2 billion synergy target, to be achieved within six to nine months of the deal's close in October.The cost cuts and other savings will be across the board, with the biggest increase expected in the downstream, or refining and marketing, sector. In addition, the company's return on capital employed is projected to grow by 2 percent to 3 percent in 2003 to 2004.Chairman and Chief Executive David O'Reilly also said oil and gas production would grow at an annual rate of 2.5 percent to 3 percent over the next five years, with production growing one percent in 2002 because of OPEC-related factors.He also commented on the company's $2.5 billion investment in Dynegy Inc., which has agreed to buy troubled Enron Corp. for $9 billion in stock. "Our participation offers a combination of significant upside potential and terms that will protect our investment,'' O'Reilly said.