VALDEZ SPILL THRUSTS STEADY EXXON INTO NATIONAL SPOTLIGHT

By CLAUDIA H. DEUTSCH
The New York Times

NEW YORK- Lawrence G. Rawl must find his current circumstances unbearable.For two years now, Rawl has headed the Exxon Corp., the country's second largest company after General Motors. And in that time, he has made a science out of the low profile.

One on one interviews with reporters were few and far between, and analysts' meetings were rarer still.

Yet last week Rawl found himself in a spotlight that even the most publicity loving chief executive would want to avoid. And it must have made him wish he had come forward weeks ago.

For until March 24, when an Exxon tanker caused one of the worst oil spills in history, he would have had a fairly happy story to tell.

Indeed, Exxon is in perhaps its best shape ever. After several years of turmoil, complete with job cuts and divisional consolidations, it has struck such a nice balance between "upstream" production of crude oil and natural gas and "downstream" products like gasoline and chemicals that it is effectively shielded from the vicissitudes of the volatile oil market.

While many oil companies are struggling in an era of depressed oil prices last year alone, prices of crude dropped 17 percent, to an average of $15 a barrel Exxon's earnings have been positively buoyant.

Moreover, a huge downsizing a few years ago has so trimmed its personnel ranks that its net income per employee last year was $52,100, one of the highest in American industry. That downsizing had another favorable impact, too: slashed red tape.

The cuts, which trimmed 80,000 jobs from the company's peak employment of 182,000 people in 1982, went deep into Exxon's bureaucracy.

Indeed, there were 1,362 people at New York headquarters at yearend 1985; a year later, there were 330. Today, Exxon managers can make decisions without waiting for multiple approvals or top management consensus a change that should have positioned the company to turn on a dime in response to any curveball the outside world could throw.

At least, that was the theory. The reality turned out to be far less pleasant.

Exxon seemed to respond to the oil spill off the Alaska coast in slow motion, raising questions of whether all the downsizing had yielded a new, improved Exxon, or had in fact weakened the company not only in terms of a decimated oil spill control team, but of overall management control.

Questions about the full extent of the company's legal and moral liability in the oil spill continue to rage.

Wall Street seems to view Exxon's apparent mishandling of the environmental debacle as an aberration.

Analysts place far more weight on Rawl's strategic savvy than on the company's bad showing during the spill. And Exxon's cash flow is such that no one expects that even very high liabilities will hurt it much.

Thus, despite the black eye it has gotten because of the spill, Exxon's stock barely fluttered during the last week.

It closed at $44.125 the day before the accident; it has traded within a few eighths of a point of that number ever since.

Still, Exxon's image has taken a beating that the company's executives are finding hard to bear.

On Thursday Rawl was forced into the limelight, granting interviews to Reuters news service and appearing on public television's "MacNeilLehrer News Report" to explain his company's actions since the spill.

Back at headquarters, Exxon's president, Lee R. Raymond, agreed to a lastminute interview for this article.

Raymond offers a version of Exxon's cleanup actions that differs dramatically from that provided by Alaska officials.

By the morning after the spill, Raymond said, "we had a lot of cleanup equipment on the ground, but we couldn't get the permits to use it until it was too late."

He also dismisses suggestions by some experts that the departure of at least nine oil spill specialists during the staff cutbacks might have slowed Exxon's reaction.

"We have people all over the world trained to handle oil spills, even if they don't have the exact title of oil spill specialist," he said.

Still, Raymond makes no attempt to play down the seriousness of the situation. "We're chagrined, we're disappointed, we're even devastated to a degree," he said.

He and Rawl must also be humiliated. For ever since the Exxon Valdez, a 978foot tanker owned by the Exxon Shipping Co., hit a shallow reef and started pouring oil into Prince William Sound, Exxon has looked more like a bumbler than an industrial titan.

As the story unfolded last week, each day brought another slap at Exxon's image reports that the ship's captain had a high level of alcohol in his blood the day of the accident; that the ship had been run aground by a third mate who was not certified to navigate those waters; that the chemical dispersants the company wanted to use did not work well in calm waters, and that cleanup booms and skimmers that were supposed to be ready to handle emergency spills were not available during the two days immediately following the spill, while winds gusting up to 70 miles an hour made them almost useless when they did show up.

By the time another Exxon tanker rendezvoused with the Valdez and started pumping out the oil, more than 240,000 barrels had poured into the waters.

Experts are not sure the spill can ever be completely cleaned up, let alone how much it would cost. But on one thing they are certain: The cleanup task will be arduous, and expensive.

For Exxon, though, money is not the issue. While the cleanup costs might represent a formidable hurdle for a smaller or less robust company, for Exxon, they will mean little.

Under the law that established the Alaska pipeline, Exxon's liability would be limited to $100 million.

Moreover, there is an industrywide fund to pay for anything after the first $14 million, and Exxon's insurance probably will pick up part of the rest.

The company may turn out to be liable for more damages if it is judged to have been negligent. But whatever the final amount, chances are it will be one that Exxon, with $5.3 billion in profits last year, easily can absorb.

"They've got about the strongest balance sheet in the industry, and even if the cleanup cost $400 million and they had to pay for all of it themselves, it wouldn't have any impact on them," said Dillard P. Spriggs, president of Petroleum Analysis Ltd., an oil industry consulting firm in New York.

Analysts give Rawl full credit for the company's fiscal health. "Rawl reacted very decisively to reductions in oil prices in 1986," said Constantine Fliakos, an oil analyst with Merrill Lynch who maintains a neutral position on Exxon stock only because he feels it is selling at full value.

"The result is that Exxon is incredibly strong in all segments of its business, including production, refining, marketing and chemicals. Not that many oil companies are that strong."

The vote of confidence should provide a measure of comfort for Rawl during what is clearly a trying time.

Rawl, who is 60, has worked for Exxon for 37 years, was Clifton C. Garvin Jr.'s president and heir apparent well before the orderly transition took place in January 1987.

Most Exxonwatchers say that, even though Rawl has not made drastic strategic changes at Exxon since he took over, he had a strong hand behind the scenes in molding the company that he inherited.

And management experts give him credit for not tampering with policies and practices that have proven to work.

Take Exxon's stock buyback program. Since 1983, the company has been buying up its shares at an accelerating rate.

To date, it has repurchased about 25 percent of its shares, for $14 billion and there is no sign that the buyback program will be ended soon.

Buyback programs are not unusual in industry, of course. Shareholders love them, because they mean that future dividends and profits will be spread over a shrinking equity base.

And managements love them, too, because fewer outstanding shares usually means higher pershare prices, and thus, less chance for a hostile takeover.

But at Exxon, whose size makes a takeover fairly remote, the buyback has served different purposes.

For one thing, it has kept Exxon's own investors from panicking when an oil price drop or an oil spill in Alaska, for that matter seemed to threaten the company's earnings potential.

"The stock buyback program has given investors comfort because there is always the feeling that, no matter what happens to the oil market, there is an active buyer for the stock," said William H. Brown 3rd, an oil analyst at Kidder, Peabody who suggests that people buy Exxon stock.

The buyback program has had strategic impact as well. By choosing to use its money to buy its stock, Exxon rejected the option of spending all of its cash on major acquisitions.

While the company has been buying small patches of reserves here and there, its only big acquisition was the $3.24 billion purchase of Texaco (Canada), which its 70 percentowned Imperial Oil Ltd. bought earlier this year.

The purchase gave Imperial a share in four major Alberta oilfields that produce more than 100,000 barrels a day, sizable natural gas outlets, two refineries and 1,800 gasoline stations, putting Imperial in control of 36 percent of Canada's total gasoline sales.

But for the most part, while Chevron was out buying Gulf, and Texaco and Pennzoil were fighting over Getty, Exxon was buying well, Exxon.

"In effect, they were buying their own reserves in the ground, and at a very cheap price," Spriggs said.

At an average pershare price of $29.95, they got a very good buy. According to Spriggs, over the last five years Exxon has averaged returns of 25.5 percent a year to its shareholders.

Although some of the other huge multinational oil companies Royal Dutch Petroleum and British Petroleum come to mind yielded similarly stellar returns, most oil companies looked shoddy by comparison.

"If a company is going to be judged by the extent to which it rewards the shareholder, Exxon scores Aplus," said Fliakos of Merrill Lynch.