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M 4> t-Y•.. , s a a a k Y s i.K ., f- .t Wall Street Journal August 26, 1977 i Indi;unaStanddrd Labels Purchase, Offer I.Purt of Alove to. WY id,er Tecnnoto~v Base ( By Ks Axr.s S>trr:uFs 1 StYffRepOrtAOJ•t)ICwALLSTRV.erJOORVAI,. t. CI-lIC.',GO-The acquisition by Standard Oil Co. (Indiana) of a mtror.ty inteaes: in an :eireu+onic company lastliay and the teeder oyer underway for shares of a microbiology concern are significant, if small, steps in the oompany's campaign to broaden its technol- ogy base, John E. Swearingen, chaitr.tan, said. Although neither was labeled a"di+er- sificat:on" move, the executive said in an in- ten-lew that "our long-term objective Is to develop opportunitiesforinvestmentin higS- technology'areas, perhaps by finding Ideas tltat others have and applying our own re- aources and manpower:" _ _ He added, "We're also looking at a num- ber of other (companies) but not in those sa.-ne areas." He didnY identify specific technology areas under consideration. And he noted that a decision hasnlt yet been reached on whether Indiana Standard w-ilt 1imit future acqpisitions to minority inter- ests, or buy complete control. The May transaction Invo1ved the pur- chase of about a 19 % interest In Analog De- vices Inc., a maker of electronic devices used In precision measurement and conL-oll instru^tentation. The transaction marked In- diana Standard's entry into the electronic Lndtutry and was completed' at a cost of about SS million. Still in process and scheduled for comple- : tion Sept. 6 is Lhe tender offer for preferred and con•-mon shares of Cetus Corp. Lone Term Potential :, ~ Cetus is a five-year-old biological and gr t netics engineering company based in Berke- ley; Calif. Revenue is smalll in relation to that generated by Indiana Standard, but Mr. Swearingen said "there is considerable lone term profit potential" in that field. Referring to the record-breaking SAOO million debenture financing In July, Mr. Sweanngen said major additional security Issues areo't slated to be sold publicly dur- ir.g the remainder of the year. But'he didn't rule out the possibility that there may be some small borrowings undertaken for such purposes as pollution control. Looking far- tt:er ahead, he said more funds will be needed than can be generated Internally and ;"so I can see ahead to the time when we will have to borrow again, but not this y ear.' . . He added that'further borrowtngs witl be required in 1976 and 1979 to meet larger cap- Ital-spending requlrements in those years. However, the executive stressed that the comPany's capital structure won't exceed a 2i75 debt to-equity ratlb: No equity tinanc- I i•~g is~v~ce of normal seasonal downward ad- currentty plaaned, he sald. j~tinenes he said Iact winter severe Capital,., spending this year !s Deing ' wYather rnnditions over mueh of the councry ~ caused many refineries to operate at maxi- + mum rates to produce heating oil. Gasoline I production, as a consequence, increased, adding to iaventories at a time when de- rnand was slack, he sald; FaiLt to Materialize boosted to about $2.1 billion from $1.7 billioa in 1976; be noted. He said; "I think the pro. gratn will be,even higher in the next two years." Capital spending will be primarily co,*.centrated on the installation of facilities for the production of oil and gas both in the U.S and abroad; he added. In the area of possible divetsification, Mr, Swearingen observed;,^St'e've looked at a lot of things but haven't seen fit yet to make a major investment outside our cur rent lines (of business) where there's still a large diversity of opportunities.° ' Be said, "We are continually looking at acquiring a position in the coal business and will probably acquire coal' properties at some point, but there aren't any specific plans." The recently atirtounced proposed part- nership in Indonesia with U.S. Steel, Corp. and a Dutch steelmaker to develop a $1 bi1- llon nickeliproject Is "still a long way from being a reality.:' Indiana Standard has about a 25%. interest In the venture, but Its exact participation will depend on whether ar,oL;'erparmer Is brought in. Indiana Standard will be drilling between 60 and 70 o)l wells L's the so-called over- L"r.tst belt in the Rocky Mountain area this ' gj ar he said~ So far, discoveries have inrll lved "smallito medium-sized fielaL+, but, eventually we bope to find a major one," he' i added. Still Awaiting Approval The five-year oilishate development pro- gram announced earlier in the year by Indi'- ~ ana Standard and Gulf 0[i Corp. still is , awaiting government approval, he said. Re- ferriitg to the withdrawal of other major oil : companies from shale oil pro;ects in the Co1- ` orado region4 he said. "We think the quality ! of our tract is better than others.".And, Te ; added„"SPe hope It will be only a matter of : weeks for approval of the projects„bui4here isn't any way of knowing for certain." He cautioned that It will be at least until the mid-1930s before any significant produc- tion, even under the best circumstances, can be expected. F1:11-scale operations would ra qu'sre all expenditure in a range of 52 billion to $3 billion, he said. Elsewhere, he noted that the company- has increased the number of tertiary oil re- covery operations to nine from the seveni earlier in the year. Butl he predicted that s'.gailicant tertiary production can't be antiel-, pated until the 1960s. Current weakness of gasoline prices lh i some marketing areas stems from larger- than-normal crude oll and gasoline Inventoa l ries, which, In tura, triggered price cuts in ® ® taW resuiced, In pari; from la!t sp:v; overbuy-: iag by users in anticipauoo of a price Lr; crease by fore gn producers in July. The; crude p:ice increase filed ta materializ fe- ;~rr S'.vearingi:n didn t pevject earnings , for the current quarter or for the year but l said "so far things are tracking prtty well, and we see no major change needed for ear- f lier [orecastt " The compaay's goal has beea for an earnings Improrement of at I least 10%m annually. Recent per-share pro;ec- tions for 197: earniegs by sei~rites analysts ~ have generally fallen in a range of 36.8i to f 57.15. . r l In 19'6, earnings were Sa?2.9 million ,, or : C5.09 a share. In the first half of 197T net- was 5521.6 ml!lion, or S3:56 a share. I While the market for chemicals, incled- ing most of those produced by Indtana Stan- dard, is wealc, he said, "It IsnY a permarent situation, and we're still optimistic about the future of the chemicals we make-" In pat~c- ular, he cited terephthalic acid used in pro- duciitg sotttirin;t bottles_ About 3331 million is being spent for c`temical capital Investments this year. And nextyear, a substantial amount aso is proj- ected, although "perhaps not quite as large as in the current period; " he stated. k I Y . , EF " F •