Section 9 - Financial Statements and Exhibits

 

Item 9.01.		Financial Statements and Exhibits
(d)		Exhibits
99.1		Press release dated December 10, 2010.
99.2		Slides dated December 10, 2010.

 

 

 

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SIGNATURE

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	OCCIDENTAL PETROLEUM CORPORATION
	(Registrant)
DATE:  December 10, 2010	/s/ ROY PINECI
	Roy Pineci, Vice President, Controller
	and Principal Accounting Officer

 

 

 

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EXHIBIT INDEX

 

 

99.1		Press release dated December 10, 2010.
99.2		Slides dated December 10, 2010.

 

 

EXHIBIT 99.1

For Immediate Release: December 10, 2010

 

Occidental Petroleum to Divest Argentine Assets, Purchase New U.S. Assets,

Increase Dividend

	Ÿ	Argentine Assets Divested
	Ÿ	New U.S. asset acquisitions in South Texas, North Dakota; Additional 13% interest in Plains All-American (PAA) General Partner; 50% JV interest in Elk Hills Power Plant
	Ÿ	21% dividend increase

LOS ANGELES, December 10, 2010 – Occidental Petroleum Corporation (NYSE:OXY) today announced it has executed an agreement with a subsidiary of China Petrochemical Corporation (Sinopec) to sell Occidental’s Argentine oil and gas operations for after-tax proceeds of approximately $2.5 billion.

Occidental also announced that it had executed agreements to purchase oil and gas properties in South Texas and North Dakota for about $3.2 billion. Additionally, Occidental announced that it has signed an agreement to increase its General Partner (GP) ownership in Plains All-American (NYSE:PAA) to approximately 35 percent; and it has agreed to acquire the remaining 50 percent joint venture interest in the Elk Hills Power Plant.  

Occidental expects all of these transactions to be completed no later than the end of the first quarter of 2011, subject to normal regulatory approvals.

"These transactions will be immediately accretive to our earnings, return on capital employed and cash flow after capital. With these new acquisitions and without Argentina in our asset mix, achieving both our short-term and long-term average annual production growth outlook of 5-8 percent will be more certain and will generate higher returns,” said Dr. Ray R. Irani, Chairman and Chief Executive Officer of Occidental Petroleum Corporation.

“These properties, combined with acquisitions completed earlier this year, will more than replace the production from the sale of Argentina. We expect that each of these new acquisitions together with future drilling, potential exploration and consolidation opportunities in these areas, over time, will grow to over 50,000 barrels of oil equivalent per day (BOEPD).”

“In light of our outlook for improved free cash flow, the Board has agreed to increase our common dividend rate by 21 percent from 38 cents per quarter to 46 cents per quarter effective with the April 15th payment. The formal dividend declaration will be made by the Board of Directors in February," said Dr. Irani.

The South Texas assets will be purchased from Shell for about $1.8 billion and currently produce approximately 200 million cubic feet per day of gas equivalent. Shell has owned and operated the properties for many years. The assets will be 100 percent operated by Occidental and have an excellent inventory of drilling opportunities.

(More)

 

 

 

 

Occidental is purchasing, from a private seller, approximately 180,000 net contiguous acres in North Dakota which produce from the Bakken formation and are prospective in the Three Forks formation. The purchase price is approximately $1.4 billion. The assets currently produce approximately 5,500 BOEPD and Occidental’s net risked reserve exposure is in excess of 250 million barrels of oil equivalent. Combined with Occidental’s other interests in the Williston Basin, Occidental will have an interest in over 200,000 net acres and over 6,000 BOEPD of production. Occidental expects to grow production in the Williston Basin to at least 30,000 BOEPD over the next five years.

Occidental is purchasing an incremental 13 percent ownership in PAA’s general partner, bringing its total ownership in the GP to approximately 35 percent. PAA’s operations compliment Occidental’s domestic oil and gas operations. Plains is one of the largest operators of oil pipelines in North America with operations in Texas, California, and North Dakota, among other areas.

In addition, Occidental is purchasing Sempra Generation’s 50 percent interest in the Elk Hills Power Plant, bringing Oxy’s ownership to 100 percent. This will improve efficiency and lower operating costs at Oxy’s Elk Hills business unit.

Occidental’s Argentine assets being divested currently produce approximately 44,000 BOEPD net to Oxy. When the transaction closes, Occidental expects to report a gain on the sale.

The company will finance the acquisitions from both existing balance sheet cash and debt financing.

 

Editors Note: Additional information and maps available at

http://www.oxy.com/transactionfacts/pdf.html.

 

About Oxy

 

Occidental Petroleum Corporation is an international oil and gas exploration and production company with operations in North America, Middle East/North Africa and Latin America regions. Oxy is the fourth largest U.S. oil and gas company, based on equity market capitalization.  Oxy's wholly owned subsidiary, OxyChem, manufactures and markets chlor-alkali products and vinyls. Oxy is committed to safeguarding the environment, protecting the safety and health of employees and neighboring communities and upholding high standards of social responsibility in all of the company's worldwide operations.

 

Forward-Looking Statements

 

Portions of this press release contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Factors that could cause results to differ materially include, but are not limited to: global commodity pricing fluctuations; supply and demand considerations for Occidental’s products; not successfully completing, or any material delay of, any development of new fields, expansion projects, capital expenditures, efficiency-improvement projects, acquisitions or dispositions; potential failure to achieve expected production from existing and future oil and gas development projects;

 

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exploration risks such as drilling unsuccessful wells; any general economic recession or slowdown domestically or internationally; higher-than-expected costs; potential liability for remedial actions under existing or future environmental regulations and litigation; potential liability resulting from pending or future litigation; general domestic and international political conditions; potential disruption or interruption of Occidental’s production or manufacturing or damage to facilities due to accidents, chemical releases, labor unrest, weather, natural disasters, political events or insurgent activity; failure of risk management; changes in laws or regulations; or changes in tax rates.  Words such as “estimate”, “project”, “predict”, “will”, “wo uld”, “should”, “could”, “may”, “might”, “anticipate”, “plan”, “intend”, “believe”, “expect” or similar expressions that convey the uncertainty of future events or outcomes generally indicate forward-looking statements. The United States Securities and Exchange Commission (SEC) permits oil and natural gas companies, in their SEC filings, to disclose only reserves anticipated to be economically producible, as of a given date, by application of development projects to known accumulations.  We use certain terms in this presentation, such as net risked reserve exposure and net risked reserve potential, that the SEC’s guidelines strictly prohibit us from using in our SEC filings. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Occidental does not undertake any obligation to update any forward-looking statements, as a result of new information, future events or otherwise. U.S. investors are urged to consider carefully the disclosure in Occidental's Form 10-K, available through the following toll-free telephone number, 1-888-OXYPETE (1-888-699-7383) or on the Internet at http://www.oxy.com.  You also can obtain a copy from the SEC by calling 1-800-SEC-0330.

 

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Contacts:	Richard S. Kline (media)
	richard_kline@oxy.com
	310-443-6249
	Chris Stavros (investors)
	chris_stavros@oxy.com
	212-603-8184

On the web: www.oxy.com

 

 

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EXHIBIT 99.2

 

Divestment of Argentine Assets, Purchase of New U.S.
Assets, Dividend Increase

Occidental Petroleum Corporation


December 10, 2010

 

 

 

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• Divestment of Oxy’s Argentine oil and gas operations to
 Sinopec for after-tax proceeds of approximately $2.5 billion

• Oxy to purchase oil and gas properties in South Texas and
 North Dakota for about $3.2 billion

• Oxy to increase its interest in General Partner (GP) ownership
 in Plains All-American (PAA) by 13% to approximately 35%

• Oxy has agreed to acquire the remaining 50% joint venture
 interest in the Elk Hills Power Plant from Sempra

• 21% increase in our common share dividend rate from $0.38
 to $0.46 per quarter effective with the 4/15/2011 payment

Summary of Transactions & Announcements

 

 

 

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• These new acquisitions and the sale of Argentina will:

 – be immediately accretive to our earnings, ROCE and cash flow after
 capital;

 – provide greater certainty in achieving both our short-term and long-term
 average annual production growth outlook of 5 to 8%;

 – increase the domestic weighting of our Oil and Gas operations;

 – not materially alter the mix between our oil and natural gas reserves or
 production.

• These properties, combined with acquisitions completed
 earlier this year, will more than replace the production from
 the sale of Argentina

• We expect that each of these new acquisitions together with
 future drilling, potential exploration and consolidation
 opportunities in these areas, over time, will grow to 50+
 mboe/d

Impact of Transactions

 

 

 

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• Plains is one of the largest operators of oil pipelines in North
 America with operations in Texas, California, and North
 Dakota, among other areas

• PAA’s operations compliment Oxy’s domestic oil and gas
 operations

• Oxy’s purchase of Sempra’s 50% interest in the Elk Hills
 Power Plant will improve efficiency and lower operating costs
 at our Elk Hills business unit

• Oxy’s Argentine assets being sold currently produce ~ 44
 mboe/d net to Oxy

• When the transaction closes, Oxy expects to report a gain on
 the sale

Impact of Transactions

 

 

 

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• We expect all of these transactions to be completed no later
 than the end of 1Q11, subject to normal regulatory approvals

• Our outlook for improved free cash flow provides for the
 substantial increase to our dividend

• Oxy will finance the acquisitions from both existing balance
 sheet cash and debt financing

Impact of Transactions

 

 

 

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Production Improvement Post Acquisitions and
Argentina Divestiture

2011

2012

2013

2014

44

62

64

65

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Argentina
Forecast

Shell So. Texas
Acquisition

North Dakota
Acquisitions

Other 2010
Acquisitions

Current

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These properties, combined with
acquisitions completed earlier this
year, will more than replace the
production from the sale of Argentina

 

 

 

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• South Texas assets will be purchased from Shell for about
 $1.8 billion and currently produce ~ 200 mmcf/d of gas
 equivalent

• Shell has owned and operated the properties for many years

• The assets will be 100% operated by Oxy and have an
 excellent inventory of drilling opportunities

• Fields in transaction: McAllen Ranch, Javelina, Slick Ranch,
 McAllen Pharr & La Copita/North Rincon, and Lyda

• 109,000 gross acres / 92,800 net acres

• Over 550 active wells

• Working interests average 92%, net revenue interest (NRI)
 averages ~ 85%

Oxy - Shell South Texas Assets Transaction

 

 

 

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• Over 360 Bcfe proven developed reserves

 – ~ 840 Bcfe of identified additional resource potential

• Condensate & NGLs have comprised ~ 30% of total revenue

• Lease Operating Expense (LOE) of $0.47-0.74/Mcfe

• Gathering capacity of ~ 500 mmcfe/d

• Aggregate compression capacity ~ 230 mmcfe/d

• Five field areas have cumulatively produced nearly 5 TCF

• Numerous Vicksburg and Frio infill and step-out drilling
 opportunities

 – Vicksburg opportunities in 12,000’ to 17,000’ range, 3 to 7 Bcfe/well

 – Frio opportunities at 9,000’ to 12,000’, 2 to 5 Bcfe/well

Oxy - Shell South Texas Assets Transaction

 

 

 

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Houston

Gulf

of

Mexico

Corpus Christi

TEXAS

Mexico

Starr County

Hidalgo County

La Copita /

North Rincon

Lyda

McAllen Ranch

Slick
Ranch

Javelina

McAllen Pharr

Rio Grande

City

Edinburg

Oxy - Shell South Texas Assets Transaction

 

 

 

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• Purchasing from a private company all rights, title and interest
 in ~ 180,000 contiguous net acres in North Dakota within the
 southern extents of the Bakken and Three Forks Formations

• The purchase price is approximately $1.4 billion

• Operated working interests average 63% with average net
 revenue interest (NRI) of ~83%

• Acreage is located in Dunn, Billings and Stark Counties, ND

• Total of 44 operated and 17 non-operated wells producing
 approximately 5,500 boe/d from Bakken and Madison
 Formations

 – Currently 5 active drilling rigs operating on acreage with plans to
 increase rig count during 2011 to 8 rigs

 – Five wells that are awaiting completion

Oxy - North Dakota Assets Transaction

 

 

 

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• Control of 200 operated Drilling Spacing Unit’s (DSU) and
 interest in 110 non-operated DSU’s; over 98% of DSU’s are
 1280 acre units

• Prospective across entire acreage position for Three Forks
 and deeper objectives

• Net risked reserve potential in excess of 250 mmboe from the
 Middle Bakken and Upper Three Forks Formations

• Combined with existing Oxy assets in the Williston Basin, the
 acquisition will result in total interest in over 200,000 net acres
 and 50 operated wells producing over 6,000 boe/d

• Oxy expects to grow production in the Williston Basin to at
 least 30,000 boe/d over the next five years

Oxy - North Dakota Assets Transaction

 

 

 

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NORTH DAKOTA

South Coteau

Nesson

Anticline

Elm Coulee

Field

Parshall-

Sanish

Fields

Russian Creek

Burke

Ward

McLean

Mercer

Stark

Oliver

Williams

Divide

Roosevelt

McKenzie

Mountrail

Dunn

Billings

Renville

Richland

Morton

MT

ND

Dawson

Golden

Valley

Other Notable Areas of
Williston Basin Production

Other Oxy Operated
Acreage

Oxy Acquisition Area

Burleigh

Sheridan

McHenry

Bottineau

Bismarck

SD

Oxy North Dakota - Williston Basin

 

 

 

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Portions of this presentation contain forward-looking statements and involve risks and uncertainties that could
materially affect expected results of operations, liquidity, cash flows and business prospects. Factors that could
cause results to differ materially include, but are not limited to: global commodity pricing fluctuations; supply and
demand considerations for Occidental’s products; not successfully completing, or any material delay of, any
development of new fields, expansion projects, capital expenditures, efficiency-improvement projects, acquisitions or
dispositions; potential failure to achieve expected production from existing and future oil and gas development
projects; exploration risks such as drilling unsuccessful wells; any general economic recession or slowdown
domestically or internationally; higher-than-expected costs; potential liability for remedial actions under existing or
future environmental regulations and litigation; potential liability resulting from pending or future litigation; general
domestic and international political conditions; potential disruption or interruption of Occidental’s production or
manufacturing or damage to facilities due to accidents, chemical releases, labor unrest, weather, natural disasters,
political events or insurgent activity; failure of risk management; changes in law or regulations; or changes in tax
rates. Finding and Development costs calculations inherently compare costs and reserves from separate periods.
The United States Securities and Exchange Commission (SEC) permits oil and natural gas companies, in their SEC
filings, to disclose only reserves anticipated to be economically producible, as of a given date, by application of
development projects to known accumulations. We use certain terms in this presentation, such as reported reserves,
EUR, expected ultimate recovery, potential reserves, discovery volumes, recoverable resources and oil in place, that
the SEC’s guidelines strictly prohibit us from using in our SEC filings. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this presentation. Unless legally required, Occidental
does not undertake any obligation to update any forward-looking statements, as a result of new information, future
events or otherwise. U.S. investors are urged to consider carefully the disclosures in our 2009 Form 10-K, available
through the following toll-free number 1-888-OXYPETE (1-888-699-7383) or on the internet at http://www.oxy.com.
You also can obtain a copy form the SEC by calling 1-800-SEC-0330. We post or provide links to important
information on our website including investor and analyst presentations, certain board committee charters and
information that SEC requires companies and certain of its officers and directors to file or furnish. Such information
may be found in the “Investor Relations” and “Social Responsibility” portions of the website.

Cautionary Statement

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Occidental Petroleum Corporation

 

 

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