Arco to Cut Up to 1,000 Jobs in Major Restructuring : Oil: Fewer than 100 of the reductions will be in California. Third-quarter earnings dropped sharply, the L.A.-based firm said.

In its most extensive restructuring since 1985, Atlantic Richfield Co. said Monday that it will cut 900 to 1,000 jobs as it ends the hunt for oil in the Lower 48 states.

The move--which parallels domestic belt-tightening by other oil companies--was announced along with a sharp drop in third-quarter earnings to $68 million, down from $332 million in the same quarter of 1992.

Los Angeles-based Arco, the nation’s seventh-largest oil company, will divide its Dallas-based Arco Oil & Gas Co. unit into four self-supporting business entities, only one of which will be involved in exploration--and that for natural gas.

The job reductions, mostly in Texas, amount to less than 4% of Arco’s worldwide work force of 26,000. Fewer than 100 will be in California. Still, Arco expects the reorganization to save $100 million annually.

“What we have seen over the years is that the unit cost of our Lower-48 operations has been moving toward the high end of the industry,� spokesman Albert Greenstein said. “By reducing layers of management and streamlining operations, we will reverse this trend.�

Investors apparently applauded the move; Arco stock Monday jumped $2.25 to $113 on the New York Stock Exchange.

Arco’s move is one more by the largest U.S. oil companies in a general shift away from investment in domestic exploration.

“What Arco’s doing is playing to its strength,� said J. Robinson West, president and chief executive of Petroleum Finance Co. in Washington. “It’s rare that a big company makes big money with a lot of little fields, which is the situation for everybody in the Lower 48 now.�

A new Bakersfield-based unit will concentrate on production from existing wells and three cogeneration plants. Arco Long Beach Inc., which manages production in the Wilmington field in an arrangement with the state of California and city of Long Beach, will limit its development plans to enhancing the production of proven reserves.

The Permian/East Texas operation, based in Midland, Tex., will also dig new wells only to develop existing fields. A natural-gas exploration and production group based in Houston will be the only one to continue with a small exploration budget.

Apart from Arco’s extensive oil reserves in Alaska, the company has recently found greatest promise in its gas discoveries, including fields in Indonesia and offshore China.

“The oil business is a mature and relatively static business, but the gas business is exciting,� West noted. “And internationally, Arco is in a pretty good position.�

Arco attributed much of the drop in earnings to onetime charges for the retroactive 1% increase in U.S. corporate income tax. The firm also took $50 million in losses after a federal court of appeals confirmed a class-action judgment against Arco on Sept. 30 in a 1979 suit that alleged violations of Energy Department price controls.