Gulf Oil Corp., with sales last year of $17.8 billion is the smallest of the "seven sisters" of international oil. Five years after the upheavals of 1973, it may also be the least international, having repatriated a lot of its assets to the United States.
And over this period. Gulf probably has been the most troubled of the companies, as well, though its troubles have had little to do with its basic oil and gas operations.
Rather, they originated, in one case, from revelations of a $5million company political slush fund that caused the Mellon family-dominated Gulf board to sack dramatically Chairman Bob Dorsey and three other top officers in January 1976.
And soon after Jerry McAfee, the succeeding chairman, arrived on the scene, the company became ensnared in charges it was part of an international uranium cartel that had acted in concert to send world prices of uranium soaring.
Gulf's defense that it was forced to join the cartel arrangements by the government of Canada - where it was substantial operations - lead one Congress to label the company "the corporate Patty Hearst."
"Gulf's a company that's been beaten around the ears so much it's hard to focus on running their business," commented Joseph Tovey of Trovey and Co.
Under McAfee, however, Gulf managed to focus on a restructuring of the company, designed to improve its domestic oil and gas productive through aggressive acquisition of new acreage, and to increase the profit-ability of its refining operations. Meanwhile, it also has rid itself of some questionable past piversification ventures, like the city of Reston, Va.
Small by comparison with the other big internationals, Gulf nonetheless has embarked on a capital spending program that dwarfs all but Exxon and Royal Dutch/Shell.
Over the past five years, Gulf has spent $9 billion, with two thirds of this is the United States. And in 1977 alone. Gulf laid out more than $3 billion for one of the biggest capital spending splurges ever undertaken by a U.S corporation.
About $450 million of this total was for the acquisition of Kewanee Industries, a producer of specialty chemicals, which the company says represents a significant petro-chemical diversification for the company.
While Gulf's strong financial position has allowed it easily to finance the spending program internally, its short-term effect has been to reduce earnings for the corporation.
Last year Gulf reported net income of $52 million, down 8 percent from the year before, and 29 percent below its 1974 record of $1.07 billion. And for the first six months of 1978, net income is down nearly 5 percent to $262 million running counter to the up-trend for the other big oil majors.
As a result, Gulf earlier this year embarked on a belt-tightening program that led some observers to declare the company is in financial trouble.
This is strongly denied by the company, and also by outside analysts who feel that the short-term financial results mask some very strong under-lying oil, natural gas, coal and uranium operations for the company, primarily in North America.
"We're in a period of adjustment," admitted chairman McAfee. "But we in no way regard ourselves as in trouble. We have cut back because it became apparent that we did not have the funds to keep it up without digging further into the cashbox or going into the market to raise money. While we have plenty of capacity to do that, we just don't consider it prudent."
Gulf has one of the lowest debt radios of any of the big oil companies, and if you count its available cash position, it really has zero debt.
The jury, however, is out about whether Gulf's investment exuberance will pay off. In 1977 the company reversed its long-standing decline in domestic petroleum production. But how much oil and gas they will find in their substantial offshore acrease remains to be been.
"It is prbably premature to applaud or condemn their aggressiveness," commented George Baker, an economist with Petroleum Analysis Ltd. While Gulf still views itself as a multinational oil company it has concentrated its investments in the United States.
"A barrel of oil in this country is a darn good asset and this is where the opportunity has been said McAfee though like other oil company chiefs complained of inadequate domestic prices. But he said the international situation has begun to improve again for companies like his. Foreign governments are beginning to be more receptive to join ventures with the oil majors on exploration.
Gulf's biggest international stake before 1973 was its half interest in the Kuwait Oil Co., one of the world's largest and lowest cost producers of oil. The Kuwait government was one of the first to nationalize its oil holdings, paying Gulf and British Petroleum a token $50 million at the end of 1975 to complete the takeover.
McAfee said the events of the past five years actually have strengthened Gulf in its foreign operations .
"We no longer have as much at risk with respect to the actions of host governments." he said. "As long as we were abroad on a concession basis, the threat of the removal of that concession was a heavy tool of the host country.
But now they can't hurt us with that tool any longer. We will now be on a healthier basis with an equity participation for the beginning."