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	REMARKS TO WTSU BUSINESS STUDENTS CANYON TX APRIL 16, 1984

[Handwritten addition: Why do anything—
          1. Industry problems
          2. Commitment to stockholders]

[Handwritten addition: Why Gulf—
1. Weak sister
          A. Management prob.
          B. Image
          C. U.S. res.
          D. Strong bal. Sheet
          E. Knew what their management would do under fire?]

CHRONOLOGY OF GULF DEAL

BEGAN PURCHASES IN AUGUST 1982
          —SEPTEMBER GULF CALLS FOR SPECIAL SHAREHOLDERS MEETING

RAIDER IMAGE BEGAN TO EMERGE
          —GUNSLINGER
          —HIT-AND-RUN ARTIST
          —BUT WE SAID WE’D STICK WITH THE GULF SHAREHOLDERS

DECEMBER 2 STOCKHOLDERS MEETING
          —LEE’S COMMENT ABOUT BORROWING MONEY FOR THE STOCK
          —ALSO ON A CNN INTERVIEW WITH LOU DOBBS, LEE WAS ASKED WHAT HE’D BEEN DOING
          —HE REPLIED HE’D BEEN TALKING TO LARGEST SHAREHOLDERS
          —DOBBS ASKED HIM IF THAT INCLUDED PICKENS’ GROUP
          —LEE SAID N0, WE DON’T CONSIDER THEM SHAREHOLDERS BECAUSE THEY BORROWED THE MONEY TO BUY THE STOCK.
          —LATER ON, HE CHANGED HIS MIND.

LEE’S JANUARY 22, 1981, SPEECH
          —SAID HE WANTED TO MAXIMIZE VALUES FOR ALL GULF STOCKHOLDERS
          —I FELT THAT HE WAS FINALLY ON THE SAME TRACK WE WERE
          —MANY COMPANIES ARE DEPLETING RESERVES AND NOT REPLACING THEM
          —THOSE RESERVES ARE THE PRIMARY ASSETS OF THE STOCKHOLDERS
          —GULF WAS ON A NON-REPLACEMENT TREND
          —FOR 12 STRAIGHT YEARS HAD NOT REPLACED RESERVES

WE FELT GULF WOULD BE RECEPTIVE TO OUR IDEAS TO MAXIMIZE VALUE
          —WE WERE WRONG
          —WE PROPOSED SPINNING OFF 50% OF GULF’S OIL AND GAS RESERVES 10 SHAREHOLDERS IN A ROYALTY TRUST.
          —WOULD HAVE BEEN 25% OF CASH FLOW
          —THEY TURNED US DOWN

FEBRUARY 17, GULF MANAGEMENT OFFERED GIG $70 A SHARE FOR OUR STOCK
          —I WAS IN FLORIDA AT THE TIME WORKING OUT THE DETAILS OF OUR FINANCING ARRANGEMENT WITH PENN CENTRAL
          —I GOT THE MESSAGE LATE FRIDAY NIGHT
          —THE MESSAGE DID NOT COME DIRECTLY FROM GULF BUT THROUGH THEIR INVESTMENT BANKERS TO OUR INVESTMENT BANKERS TO OUR LAWYERS.
          —THE DECISION WAS EASY
          —$70 A SHARE FOR GIG’S STOCK
          —$72 A SHARE FOR 20 MM SHARES FROM OTHER STOCKHOLDERS
          —$55 A SHARE BLENDED PRICE FOR OTHER STOCKHOLDERS
          —RECONFIRMED MY DECISION THE NEXT MORNING
          —LEE DIDN’T KNOW UNTIL THE FOLLOWING TUESDAY THAT WE HAD TURNED DOWN HIS OFFER.

ARCO MADE A $70 A SHARE BID WHICH GULF TURNED DOWN.

FINALLY GULF ACCEPTED SOCAL’S $80-A-SHARE OFFER
          —WE HAD NO CHOICE AT THIS POINT
          —OUR PARTIAL OFFER WAS AT $65-A-SHARE

I ALWAYS LOOK AT THESE DEALS FROM THE STOCKHOLDERS’ VIEWPOINT.
          —THE APPRAISED VALUE WAS $114
          —THE PRICE WHEN WE BEGAN PURCHASING WAS $36
          —THE ALL-TIME HIGH WAS $53 IN 1981
          —THE COMPANY WAS IN LIQUIDATION
          —STOCKHOLDERS WERE NEVER GOING TO SEE $53 AGAIN
          —OUR INVOLVEMENT HAD PUSHED THE PRICE INTO THE $60s
          —WE HAD DONE A REAL GOOD JOB
          —NOW SOCAL WAS DOING AN EVEN BETTER JOB OFFERING $80.

THEN CONGRESS GOT INVOLVED
          —LEGISLATION WAS DRAFTED TO IMPOSE A MORATORIUM ON OIL MERGERS

BUT THERE WAS NO JUSTIFICATION FOR SUCH ACTION
          —FTC HAS PLENTY OF LAWS TO HANDLE ANTI-TRUST
          —SOCAL-GULF’S COMBINED MARKETING AND REFINING: 10.1%
          —SOCAL-GULF’S COMBINED O&G RESERVES: 5.8%

NO EFFECT ON CREDIT MARKETS
—SEC ADVISORY COMMITTEE ON TENDER OFFERS, SUPPORTED BY FEDERAL RESERVE BOARD CHAIRMAN PAUL VOLCKER SAYS MERGERS:
          —DO NOT DISTORT CREDIT MARKETS
          —DO NOT DIVERT INVESTMENT
          —DO NOT HURT CONSUMER’S ABILITY TO OBTAIN CREDIT
          —BASICALLY JUST A TRANSFER OF ASSETS

LEIF OLSON, CHAIRMAN OF ECONOMIC POLICY COMMITTEE CITIBANK:
          —$30 TRILLION IN EQUITY TRANSACTIONS LAST YEAR
          —$4 TRILLION IN GROSS BANK LENDING AND INVESTING
          —SO THE BILLIONS INVOLVED IN MERGERS ARE INSIGNIFICANT
          —MUCH OF THE MONEY COMES FROM THE EURODOLLAR MARKET

EXPLORATION
          —NO EFFECT
          —KELLER SAYS SOCAL-GULF WILL NOT REDUCE BUDGET

BENNETT JOHNSTON SUGGESTED SPENDING THE $13.2 BILLION ON EXPLORATION
          —GEORGE KELLER REPLIED: YOU CAN’T BORROW THAT KIND OF MONEY FOR THAT KIND OF CRAPSHOOT.
          —BESIDES, 80% OF WELLS ARE DRILLED BY INDEPENDENTS

THE BOTTOM LINE IS:
          —$13.2 BILLION INTO THE ECONOMY
          —$6.5 BILLION OF WHICH IS PROFIT TO STOCKHOLDERS
          —$2 BILLION IN TAXES TO GOVERNMENT

THE MORATORIUM LEGISLATION WAS VOTED DOWN 59 TO 37.

PENDING FTC APPROVAL THE SOCAL-GULF DEAL WILL GO THROUGH.

GOOD FOR STOCKHOLDERS
          —THE FREE ENTERPRISE SYSTEM AT WORK
          —42 MILLION STOCKHOLDERS IN AMERICA