ARCO Permian
600 N Marienfeld
P O Box 1610
Midland, TX 79701
(915) 688-5200

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Introduction to ARCO
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The companies comprising the oil and gas industry are generally categorized as being either "independent" or "major." The term "integrated" is also used interchangeably with "major." The distinction between the two categories goes beyond simply the size of the company, although majors are generally larger than independents.

An integrated or major energy company is involved in the oil and gas business from beginning to end...from the initial exploration efforts to find hydrocarbons, to the refining and marketing of gasoline to consumers. This participation in the entire value chain is known as "vertical integration." Atlantic Richfield Company is vertically integrated, and therefore falls into the "major" category.

Majors tend to be very large in terms of reserves, production, personnel and financial capabilities. They generally are involved in cutting-edge technology and have state-of-the-art information systems. Their technical and financial capabilities allow them to undertake large projects which sometimes have long payout periods.

On the other hand, the independent is a company which concentrates on the exploration, development and production of oil and gas. It may be involved in the gathering and transportation of oil and gas, and even in the processing of natural gas, but generally does not participate in the refining and consumer marketing aspects of the industry.

Independents can be characterized as being smaller, more focused and nimble. They are very concerned about cash flow, and are adept at deal-making in order to spread their risk and gain exposure to as many opportunities as possible within their targeted areas of expertise.

Both types of companies are essential to the overall health of the industry; each has its own strengths.

So, where does ARCO Permian fit in the picture? As a unit of one of the largest energy companies in the world, ARCO Permian has access to the full resources of the corporation. There is literally no project too large for us to consider, as long as it is consistent with our goals and strategies.

On the other hand, we have the autonomy to act much as an independent would, in terms of making deals. Our relatively small size (and corresponding reduced bureaucracy) means that we can be fast on our feet, making decisions quicker than many of our competitors. We are also more open to innovative approaches to partnerships and other deal-structures. Finally, we are able to participate in the "fraternity" of Permian Basin independents to an extent that most majors could not achieve. This, too, is a competitive advantage.

The bottom line is simple: ARCO Permian's position as a "hybrid" oil and gas company gives us the best of both worlds!

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