PHILLIPS &lt;P> TO EMPHASIZE CASH FLOW TO PARE DEBT

  Phillips Petroleum Co will emphasize
  improving its short-term cash flow this year to pare its debt,
  C.J. "Pete" Silas, chairman, told Reuters in an interview.
      "Our priority is to get cash flow increased from the assets
  already installed," he said, but he declined to estimate annual
  cash flow for 1987.
      Analysts estimate Phillips" cash flow at over one billion
  dlrs for 1987, while long term debt, which resulted from
  restructuring to find off corporate raiders in 1985, hovers
  about 5.9 billion dlrs as of December 1986.
       Silas said Phillips hope to achieve its goal by raising
  the capital expenditures budget to develop its oil and gas
  properties.
      "We plan to develop the properties with short-term high cash
  flow prospects," he said. He projected a capital expenditure
  budget of 730 mln dlrs, up from the 1986 expenditure of 655 mln
  dlrs.
      Nearly half of that will be spent on exploration and
  production, and most of that will be spend overseas, Silas
  said.
      "Phillips' top priority in 1987 will be to get the
  waterflooding in Norway and jack up the (Ekofisk) oil fields to
  improve our ability to extract oil and increase earnings," Silas
  said.
       Phillips estimates that the project, which is expected to
  cost 1.5 billion dlrs, will increase recovery by 170 mln gross
  barrels of oil over a period of 24 years.
      Phillips is also pursue opportunities in China where Silas
  said he was seeking "a modification of terms with the Chinese
  government to make oil discoveries (in the offshore Xijang
  fields) commercially viable."
      In the U.S. Silas said Phillips hopes to get the Point
  Arguello, Calif., field started up by the fourth quarter. "We
  expect to start up the first platform then," Silas said.
      But emphasis on short-term cash flow has also forced the
  company to part with several oil and gas assets.
      Phillips sold its interests in the T-Block in the U.K.
  North Sea and U.S. reserves totaling about 1.3 billion dlrs in
  1986 as part of a two billion dlrs asset sales program that is
  now completed, Silas said.
       "We sold high cost producing assets. They were not good
  value for us but possibly so for someone else," Silas said.
      Silas said the 1986 assets sales will not affect earnings
  for the company.
      "Everything we are doing is to manage our cash flow and we
  are using that to manage our debt. Even the asset sales, while
  regrettable, were necessary to reduce debt," Silas said.
      He said no asset sales are planned this year as long as oil
  prices don't fall sharply lower and stay at lower levels  for
  several months. "Then, everyone would be looking at sales (of
  assets), and we're no different from the others," Silas said.
      In other areas, Silas looks for improved earnings from
  Phillips chemical operations, which provided 299 mln dlrs in
  earnings for 1986, up from 219 mln dlrs in 1985.
      "This was our second best year pushed by a good supply and
  demand balance for products, low feedstocks and energy costs
  for our operations," Silas said, "In 1987 we think the market's
  supply and demand balance will be just as good but feedstock
  and energy costs will rise due to price recovery."
  

