PHILLIPS <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."