Burlington Resources Shifting Its Focus

Burlington Resources Inc. is shifting its focus to developing its 5 trillion cubic feet of natural gas reserves instead of buying more reserves or exploring for oil, analysts said.

The most visible sign of the company's new strategy is the departure last Thursday of Donald Clayton, Burlington's president and head of the company's Meridian gas unit. Thomas O'Leary, chairman of the natural gas and oil producer, will assume Clayton's duties.

Clayton presided over aggressive growth of the company's drilling lands and focused the company's assets on petroleum producing properties; O'Leary is known for his financial skills.

"They're not going to be as aggressive with the exploration and acquisition of gas fields as they have been in the past," said Benjamin Rice, an analyst with Brown Brothers Harriman.

When Clayton joined Meridian Oil's management in 1985, Burlington Resources ranked fifth in the amount of drilling land it held, behind five major oil companies including Amoco, which had 23 million acres. By 1991, Burlington Resources had 13.3 million acres of land, ahead of Amoco's 10.8 million acres.

Since then, the company has increased production on the land. For the first nine months of 1992, Meridian produced an average of 809 million cubic feet of gas a day, up 16 percent from 697 million during the same period in 1991. Oil production rose to average 40,100 barrels a day from 35,170 barrels.

At the same time, Burlington Resources spun off its pipeline unit, El Paso Natural Gas Inc. Earlier, the company sold its Plum Creek Timber Co. unit and its Glacier Park real estate holdings company. Meridian Gold Co. was divested in 1991.

Now, the company intends to spend money to develop its Bakken shale formation, its Canyon Sands reserves in Texas and its coal seam gas holdings.

The company won't project production.

"(Clayton) probably outgrew the company," said Gary Hovis, an analyst with Argus Research. "He was a real builder in the true sense of the word. He brought them into the oil and gas business."

The company gave no official reason for Clayton's departure. Analysts speculated privately that Clayton and O'Leary, who both have strong opinions about how the shrinking company should be run, couldn't coexist.