================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 10, 2002
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-9210 95-4035997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
10889 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code:
(310) 208-8800
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Item 9. Regulation FD Disclosure
- ------ ------------------------
Financial Analyst Presentation by Dr. Ray R. Irani,
---------------------------------------------------
Chairman and Chief Executive Officer
------------------------------------
April 10, 2002
--------------
The following is the text of the presentation made by Dr. Ray R. Irani,
Chairman and Chief Executive Officer of Occidental Petroleum Corporation, at the
Howard Weil Energy Conference on April 10, 2002, in New Orleans, Louisiana.
1
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Occidental Petroleum Corporation
Dr. Ray R. Irani
Chairman & Chief Executive Officer
HOWARD WEIL
Thirtieth Annual Energy Conference
New Orleans, LA
April 10, 2002
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Good morning. It's a pleasure to be here at Howard Weil's Thirtieth Annual
Energy Conference.
2
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Occidental - Overview
o One of world's largest E&P companies
- Three core geographic areas
o United States
o Middle East
o Latin America
o Leading North American basic chemicals producer
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Over the past 5 years, Occidental has undergone dramatic changes as part of
a successful restructuring program aimed at achieving substantial improvement in
our financial performance.
Today, Occidental is one of the world's largest independent oil and natural
gas exploration and production companies, with operations concentrated in three
core geographic areas - the U.S., the Middle East and Latin America.
Through our chemical subsidiary, OxyChem, Occidental also is a leading
North American manufacturer and marketer of basic chemicals such as chlorine and
caustic soda, as well as certain performance products. OxyChem also is a leading
producer of polyvinyl chloride.
3
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The BusinessWeek Fifty
"The Top Companies of the S&P 500"
o Occidental Ranks in top 5% for second year in a row
- Performance Grades
o B Total Return (1 Year)
o A Total Return (3 Years)
o C Sales Growth (1 Year)
o A Sales Growth (3 Years)
o C Profit Growth (1 Year)
o A Profit Growth (3 Years)
o B Net Margin
o A Return on Equity
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The success of our restructuring is validated by our recent ranking among
the top performing companies by BusinessWeek magazine. For the second
consecutive year Occidental is ranked among the top 5-percent of companies of
the S&P 500 by BusinessWeek based on composite performance grades for total
return, sales growth, profit growth, net margin and return on equity.
4
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The BusinessWeek Fifty
"The Top Performing Companies of the S&P 500"
2002 Rank 2001 Rank
--------- ---------
Phillips 17 Anadarko 2
Occidental 21 Occidental 7
Marathon 24 Apache 8
Apache 41 Kerr-McGee 9
Amerada 42 Amerada 18
Phillips 22
EOG 24
ChevTex 35
ExxonMobil 44
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Occidental is again ranked second among the oil and gas companies that
comprise the "Fuel" sector in the BusinessWeek survey. In the 2001 survey, 9 oil
and gas companies ranked in the top 50. In the 2002 edition, only 5 oil
companies were in the top 50. As you can see, Occidental was the second highest
rank company in both years.
5
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Forbes - America's Top 500
Occidental Petroleum
2001 Rank 2000 Rank
--------- ---------
Profits 64 74
Super 500 105 112
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The April 15 issue of Forbes magazine profiled America's top 500 companies
based on their performance in 2001. Occidental was ranked number 64 based on
profits - up from number 74 in 2000. Occidental's "super ranking" by Forbes,
which is based on a combination of performance indicators, was number 105, up
from number 112 in 2000.
6
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Forbes - America's Top 500
Occidental selected as 1 of 20 "value stocks" based on
beating sector averages in at least four of five ratios:
o Return on Equity o Price-to-Book
o Price-to-Sales o Price-to-Cash-Flow
o Price-to-Earnings
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Occidental also was one of 20 companies - and the only large cap oil
company - Forbes selected as "value stocks". Forbes believes these stocks are
undervalued on an absolute basis and relative to industry peers based on beating
their sector averages in at least four of the five ratios listed here. Forbes
highlights these 20 companies as "potential bargains within the Super 500."
7
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Total Return to Shareholders
2001
(Percentage)
[the following is a tabular representation of graphical materials]
OXY P UCL XOM BP MRO CVX APA COC AHC KMG BR APC
16% 14% 4% 4% 3% 3% 2% 0% -1% -2% -12% -15% -16%
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Let's look at some of the key measurements of our performance. In 2001, we
led our competitors in total return to shareholders with a return of 16-percent.
8
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Total Return to Shareholders
3-Year Annualized
(Percentage)
[the following is a tabular representation of graphical materials]
APA KMG OXY APC P AHC MRO COC UCL XOM BP BR CVX
44% 29% 27% 24% 18% 17% 14% 14% 11% 10% 8% 7% 6%
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Over three years, our annualized total return was 27-percent - placing us
third among our competitors.
9
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Annual Dividend Yield
Based on 4/4/02 Closing Price
(Percentage)
[the following is a tabular representation of graphical materials]
OXY MRO CVX KMG COC BP P XOM UCL AHC BR APA APC
3.5% 3.3% 3.2% 3.0% 2.7% 2.7% 2.3% 2.1% 2.1% 1.5% 1.4% 0.7% 0.6%
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Based on our April 4th closing price, our dividend yield was 3 1/2-percent
- - the highest among the oil companies. Our yield also is superior to the average
yield for large- and mid-cap companies on the S&P 500.
10
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Overall Business Strategy
o Focus on large, "legacy" oil and gas assets with growth potential
- United States - Middle East - Latin America
o Texas
- Largest oil producer
- Second largest gas producer
o California
- Largest gas producer
- Third largest oil producer
o Maintain strong balance sheet
o Harvest cash from chemicals
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Our performance is being driven by an overall business strategy that is
focused on large, "legacy" oil and gas assets in the United States, the Middle
East and Latin America.
In Texas, for example, Occidental is the largest oil producer and second
largest gas producer.
In the California market, Occidental is the largest gas producer and third
largest oil producer.
A key factor in our strategy is maintaining a strong balance sheet - and
we're doing that.
OxyChem's role in our overall strategy is to generate cash. Even in a down
year like 2001, OxyChem produced free cash flow of approximately $185 million.
11
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Oil & Gas Growth Strategy
o Three-part strategy - no single part dominates
- Exploration
o Concentrating on opportunities in core areas
- Seek EOR projects with superior returns
- Acquire assets with upside potential at attractive prices &
divest assets with limited earnings potential
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Our oil and gas business strategy has three parts, each of which plays an
important role:
o We focus on adding commercial reserves in and around our core areas through
the drill bit.
o We pursue opportunities with host governments in our core areas to enhance
the development of mature fields with large volumes of remaining oil in
place.
o Finally, we maintain a disciplined approach in buying and selling assets
whose performance can be improved by the application of new technology and
practices.
The successful implementation of our strategy relies on a business model
that is both flexible and durable.
12
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Reserve Replacement Ratio
o Proved Reserves @ 12/31/00 (MMBOE) ----------------------- 2,171
- 2001 Production (MMBOE) ----------------------------- 174
- 2001 Reserve Adds (MMBOE) --------------------------- 245
o Proved Reserves @ 12/31/01 (MMBOE) ----------------------- 2,241
o Replacement Ratio (%)
- 2001------------------------------------------------- 141
- 1999-2001 (3 Year Average) -------------------------- 316
o Finding & Development Costs ($/BOE)
- 2001------------------------------------------------- $4.80
- 1999-2001 (3 Year Average) -------------------------- $3.90
* Includes purchased reserves
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Last year, we replaced 141-percent of our worldwide production of 174
million BOE at a finding and development cost of $4.80 per barrel. Our year-end
2001 reserves exceeded 2.2 billion BOE.
Our three-year average replacement ratio from 1999 through 2001 was
316-percent at an average cost of $3.90 per BOE. We believe our replacement
costs for 2001 and for the three year period will be among the best in the
industry.
Note: Excluding acquisitions we replaced 138-percent. Acquisitions amounted to 3
million BOE - all in the U.S.
13
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Proved Reserves
Million BOE
[the following is a tabular representation of graphical materials]
1997 1998 1999 2000 2001
------ ------ ------ ------ ------
US 470 761 765 1,695 1,698
International 840 663 587 476 543
------ ------ ------ ------ ------
Total 1,310 1,424 1,352 2,171 2,241
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Historically, Occidental's oil and gas business was dominated by its
international assets. Our restructuring has dramatically changed that picture -
particularly the acquisition of Elk Hills in 1998 and Altura in 2000.
Our proved reserves have grown by over 70-percent from 1997 through 2001.
At the end of 2001, we had proven reserves of 2.24 billion barrels of oil
equivalent.
Domestic reserves, shown in red, accounted for 76-percent of our worldwide
reserves at the end of last year compared to 36-percent at the end of 1997. This
shift has lowered our risk profile and provided a stable base to support future
growth opportunities.
14
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Proved Reserves
Million BOE
[the following is a tabular representation of graphical materials]
US Qatar Ecuador Yemen Colombia Oman Russia Pakistan
1698 200 85 63 58 57 52 27
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The breakdown of our proven reserves by country clearly illustrates the
dominance of our U.S. assets. Qatar is our largest international operation, but
it accounts for only 9-percent of our proven reserves. Yemen is next with about
4-percent. Ecuador, Colombia, Oman and Russia each account for between 2 and
3-percent of the total.
15
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Oil & Gas Production
Thousand BOE/Day
[the following is a tabular representation of graphical materials]
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
US 156 180 183 282 315
International 239 258 242 179 161
---- ---- ---- ---- ----
Total 295 438 425 461 476
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Since 1997, we've increased total worldwide production by an average of
5-percent per year. In 2001, production averaged 476,000 barrels of oil
equivalent per day. Domestic production, shown in red, made up 66-percent of the
total in 2001 compared to 40-percent in 1997.
We expect production this year to average about 485,000 BOE per day.
16
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1999 Profitability/BOE*
$/BOE
[the following is a tabular representation of graphical materials]
OXY APA APC BP COC XOM KMG CHV MRO P AHC TX UCL BR
5.30 4.55 3.98 3.88 3.73 3.53 3.48 3.03 2.92 2.91 2.72 2.22 1.68 0.88
* Exploration and production income (per FAS 69 format) after taxes and
before interest expense
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One of our key goals when we began our restructuring in 1997 was to be
among the industry leaders in profitability on a unit-of-production basis. We
achieved that goal within two years by leading the industry in profitability per
barrel in 1999.
17
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2000 Profitability/BOE*
$/BOE
[the following is a tabular representation of graphical materials]
OXY APC APA KMG BP CHV XOM COC TX AHC P MRO UCL BR
11.30 9.06 8.92 8.76 7.94 7.50 7.04 7.00 6.83 6.44 6.42 6.11 5.79 5.23
* Exploration and production income (per FAS 69 format) after taxes and
before interest expense. The Marathon (MRO) results exclude a non-cash
charge of approximately $900 million.
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In 2000, the year in which we completed the Altura acquisition, we again
achieved the highest profitability per barrel among our competitors. It's worth
noting that these results were based on public data filed with the SEC.
18
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2001 Profitability*
$/BOE
[the following is a tabular representation of graphical materials]
OXY APA APC BP XOM DVN MRO KMG COC BR AHC P CVX CL
14.08 11.15 10.63 10.36 10.05 9.79 9.50 9.29 8.90 8.70 8.28 7.84 7.32 6.86
* Exploration and production income before U.S. income taxes and before
interest expense
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Since 2001 was a record year for our oil and gas business, we were not
surprised to find ourselves the industry leader once again in profitability per
barrel.
19
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Total Debt
$ Millions
[the following is a tabular representation of graphical materials]
Pro-Forma
12/31/97 12/31/98 12/31/99 Post Altura 12/31/00 06/30/01
-------- -------- -------- ----------- -------- --------
Oxy Public Debt 4,965 5,402 4,401 5,766 3,544 4,119
Other Recourse Debt 1,361 776 1,047 1,009 912 771
Permian Non-recourse Debt 2,400 1,900
-------- -------- -------- ----------- -------- --------
6,326 6,178 5,448 9,175 6,356 4,890
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At the end of 1997, our total debt was $6.3 billion. Since then, we
absorbed $7.2 billion in acquisition costs, continued to fund our capital
program at an appropriate level, paid an annual dividend of one dollar per share
- - and still managed to reduce our total debt by 23-percent.
Our debt of $4.9 billion at the end of last year was $1.3 billion below the
year-end total in 1997. Our year-end 2001 debt-to-capitalization ratio of
46-percent was the lowest in nearly twenty years.
Interest expense and preferred dividends declined from $554 million in 2000
to $423 million last year. We expect that number to fall to $345 million this
year. That's a savings of $209 million compared to 2000 and equates to an annual
improvement of 36-cents a share.
20
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Debt, Reserves & Production
1997 2001
---- ----
Total Debt ($ Millions) $6,326 $4,890
Production (Thousand BOE/Day) 395 476
Total Reserves (MILLION BOE) 1,310 2,241
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This table illustrates that while our debt has declined between year-end
1997 and 2001, our production increased by 81,000 barrels per day over the same
period - and our reserves grew by more than 900 million barrels.
21
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Middle East - Oxy Interests
[map of Middle East]
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While we expect modest growth in the U.S. over the next five years, real
growth will come from building on our strong position in the Middle East.
Occidental has business interests in Oman, Qatar, Yemen and Saudi Arabia
which are shown in yellow. We also are exploring new business opportunities in
the United Arab Emirates and a possible return to Libya - both highlighted in
green.
Our total net oil production in Oman, Qatar and Yemen is currently
averaging about 95,000 barrels per day. This represents about 25-percent of our
worldwide oil production. These three countries account for approximately
8-percent of our worldwide oil reserves.
We're continuing to build on our solid foundation in these three countries
as we compete for new opportunities in the region. Large core assets in the U.S.
and a strong balance sheet provide Occidental with a sound platform for new
growth in the Middle East.
22
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Saudi Arabia - Core Venture 2
o Development of Midyan
and Barqan gas fields
- Pipelines & processing
plants
o Downstream projects [map of Saudi Arabia]
- Water desalination
- Power generation
o Exploration in Blocks 40-
49
- Exploration success tied
to other investment
options
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In Saudi Arabia, Occidental has a 20-percent interest in the Core Venture 2
consortium. ExxonMobil is the lead partner with a 60-percent interest.
The Red Sea venture involves development of discovered gas from the Midyan
and Barqan fields in the northwest part of the Kingdom, and construction of
related gas processing and pipeline facilities. The consortium expects to build
at least one power plant and a water desalination unit, as well as evaluate the
potential for a petrochemical plant.
The project also calls for onshore and offshore exploration in Blocks 40 to
49 located in and along the Red Sea. Exploration success in these blocks will
lay the foundation for additional investment opportunities in power generation,
water desalination and petrochemicals in the western part of the Kingdom.
Intensive negotiations are continuing between the Saudi Government and the
consortium members.
23
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Oman
[map of Oman]
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Our Oman business centers on the 300-million barrel Safah field in Block 9
shown in yellow. Since the Safah discovery in 1983, our geoscientists and
engineers have continued adding new recoverable reserves with a series of
smaller discoveries in the southern part of the Block. Cumulative gross
production from Block 9 exceeds 160 million barrels - most of it coming from
Safah.
In developing these fields, Occidental uses multilateral horizontal wells
to increase production and recovery rates. Horizontal drilling improves
production rates and minimizes the number of wells needed. Today, 60-percent of
Occidental's production in Oman relies on horizontal wells.
In June 1998, we signed a contract for a 100-percent working interest to
explore Block 27 shown in light blue. Exploratory activities are currently
underway. Seismic studies have identified potential oil and natural gas
prospects.
24
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Qatar
o ISND contract awarded in
1994
- Reversed production
drop from below 20,000
barrels/day to 138,000
barrels
o ISND success leads to
new opportunities [map of Qatar]
o South Dome contract
awarded in 1998
- South Dome being
developed as North
Dome satellite
o Combined net production
is 42,000 barrels/day
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In Qatar, we successfully reversed 25 years of declining production in the
Idd el Shargi North Dome field by applying new waterflooding and reservoir
characterization techniques. When Occidental took over the operation of the
North Dome field in 1994, production had fallen below 20,000 barrels per day
from a peak of 50,000 barrels in 1970. By introducing advanced drilling systems
and new technologies, gross production increased to more than 100,000 barrels
per day, peaking at 138,000 barrels.
By nearly tripling previous peak production, Occidental established a
reputation as one of the world's leading companies in enhancing recovery from
mature fields. Our success at North Dome opened the door to new opportunities in
Qatar and other parts of the Middle East.
In 1998, the Qatari government awarded Occidental a production sharing
contract to develop the Idd El Shargi South Dome field, located 15 miles from
North Dome. Occidental is developing South Dome as a satellite field to optimize
the capital efficiency of the two projects.
25
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Qatar
o Implementing innovative
ISND waterflood
- Projected recovery of
additional 110 million
gross barrels
o Oxy net is 42 million
o Moving forward with ISND
Phase 2 [map of Qatar]
o Potential recovery of
additional 145 million
gross barrels
o Oxy net is 75 million
o Evaluating exploration
opportunities
- Submitted bid on Block
10
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Occidental also is implementing an innovative waterflood program in the
North Dome's Shuaiba Reservoir. This project is expected to result in the
recovery of an additional 110 million gross barrels of the remaining oil in
place. Occidental's share of the incremental reserves is 42 million barrels.
We've submitted a detailed project proposal for Phase 2 of the ISND
re-development project. We have reached agreement on all the technical issues
with the Government and are awaiting approval to proceed. Phase 2 has the
potential of recovering an additional 145 million barrels, including
approximately 75 million barrels net to Occidental.
We also are pursuing new exploration opportunities in Qatar. We're
currently awaiting word on a bid we submitted for Block 10, which is adjacent to
the billion-barrel Al Shaheen Field.
26
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Yemen
[map of Yemen]
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In Yemen, Occidental holds a 38-percent interest in 230,000 barrels per day
of production from the billion-barrel Masila field. Masila was one of the
world's largest oil discoveries in the 1990s. Each year since its discovery,
Masila's recoverable reserves and production have increased steadily. Today,
Masila accounts for more than half of Yemen's total production.
Occidental also holds a 29-percent interest in the East Shabwa field that
is currently producing 27,000 barrels of oil per day. We will be drilling a
series of step-out wells in Masilla and East Shabwa to add additional reserves.
27
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Yemen
[map of Yemen]
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In addition to our producing interests in Masila and East Shabwa, we have
secured interests in seven exploration blocks, encompassing nearly 15 million
acres.
Occidental has a 75-percent working interest in Block 44 located in central
Yemen where a 3-D seismic program is under way. Our geoscientists targeted Block
44 because it's on trend with the East Shabwa and Masila fields.
Occidental also holds a 50-percent working interest in Block 20 in the
central part of the country where we plan to drill 2 exploratory wells in
November. Like Block 44, Block 20 is in the midst of a hydrocarbon province
where more than a billion barrels of oil and three trillion cubic feet of gas
have been discovered.
In addition, we have a 40-percent working interest in 5 additional blocks
in northeastern Yemen along the border with Saudi Arabia.
28
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Abu Dhabi - Dolphin Project
o 25-year project
between UAE & Qatar
o Deliver 2 Bcf/day of
[map of Dolphin project] gas from Qatar's
North Field to UAE
o Construct 210-mile
pipeline
Short-Listed
Companies
-------------------
* Occidental
* British Petroleum
* ExxonMobil
* Royal Dutch/shell
* Conoco
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Now I'd like to mention several new prospects we're pursuing. Last March,
the governments of the UAE and Qatar created the Dolphin Project by signing a
25-year agreement calling for delivery of 2 billion cubic feet per day of
natural gas from Qatar's North Field to markets in the UAE by installing a
210-mile subsea pipeline.
The $3.5 billion project is scheduled for start-up in 2005. UAE officials
have said that Dolphin will serve as a catalyst to stimulate the economies, not
only of the UAE and Qatar, but the entire Arabian Gulf region. The project is
being spearheaded by the UAE Offsets Group which was set up in 1992 with the
charge of helping to diversify the UAE's economy and to reduce its dependence on
oil.
We're pleased to be one of five companies selected to compete for this
project. We submitted our bid on April 6 and expect to be informed of the
results in the near future. If we are successful in landing this project, it
would increase our net production by approximately 180 million cubic feet per
day beginning in 2006.
29
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Libya
[map of Libya]
- --------------------------------------------------------------------------------
Let me add a few words about Libya. Occidental's involvement with Libya
dates from the mid-60s. In fact, Occidental's early success in the international
arena was due to its large Libyan oil discoveries. When the Reagan
Administration imposed sanctions on the Libyan government in 1986, Occidental
left the country but retained an interest in the assets we formerly operated.
The Libyan government would like us to return, and we're prepared to do so when
sanctions are lifted.
Despite the US decision to extend the sanctions, I'm encouraged to see both
the U.S. and Libyan governments engaged in constructive dialogue aimed at
resolving outstanding issues. I believe there are people of good will on both
sides who are committed to normalizing relations between the two countries. When
that day arrives, Occidental is prepared to move quickly. This will be a good
development not only for our shareholders, but also for the people of Libya and
the US.
Note: Libya could contribute new net production of 40,000 - 60,000 barrels per
day in 2006 at the earliest.
30
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Development Projects
Gulf of Mexico - Horn Mountain
[map of Gulf of Mexico]
o 60 miles offshore/
- Water depth = 5,400 feet
o Gross reserves = 150 million BOE
o On Schedule/under budget
- First production (Late 2002)
o Net production of 20,000 BOE/Day (2003)
o Net production of 22,000 BOE/Day (2005)
- --------------------------------------------------------------------------------
In our U.S. oil and gas operations, the development of the Horn Mountain
discovery in the deep water Gulf of Mexico is on time and under budget. Oxy has
a one-third interest and BP is the operator. The discovery well, which was
drilled to a depth of nearly 14,000 feet, is located about 60 miles off the
Louisiana - Mississippi coast in 5,400 feet of water.
Gross reserves are in the 150-million BOE range - with production scheduled
to begin late in 2002. We expect net production to increase from 20,000 BOE per
day in 2003 to 22,000 BOE in 2005.
31
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Development Projects
Ecuador - Eden Yuturi
[map of northern Ecuador]
- --------------------------------------------------------------------------------
In Latin America, construction of the OCP pipeline in Ecuador is under way
and Occidental has begun development of the Eden-Yuturi oil field in the
southeastern corner of Block 15. The startup of Eden-Yuturi is scheduled to
coincide with the completion of the pipeline in mid-2003. Eden-Yuturi, together
with continued development of fields that are already on stream, will add
estimated net incremental production of at least 35,000 barrels per day.
In addition, we are expanding our exploration program in Block 15. This is
an oily area and we are hopeful that an aggressive 3D seismic program will help
us add to our exploration success in Ecuador.
Now I'd like to discuss our forecast for our major producing areas -
starting with the Permian Basin.
32
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Oil & Gas Production Forecast
Permian
(Thousand BOE/Day)
[the following is a tabular representation of graphical materials]
1997 1998 1999 2000* 2001 2002 2003 2004 2005
188 174 167 163 161 163 167 172 175
* Altura purchase closes in April
- --------------------------------------------------------------------------------
When we took over the operation in late April 2000, production had been
declining sharply. Since taking over the operation, we've succeeded in
stabilizing production. Of even greater significance, we are beginning to see a
reversal of the decline this year due to a combination of sound technical work
and a cost effective capital program. This improvement will become more
pronounced in the 2003 - 2005 period as our new CO2 projects in the Cogdell
field in Texas and Hobbs, New Mexico, and our aggressive infill drilling
program, move forward.
33
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Oil & Gas Production Forecast
Elk Hills
(Thousand BOE/Day)
[the following is a tabular representation of graphical materials]
1998 1999 2000 2001 2002 2003 2004 2005
Oil 50 48 47 50 50 55 54 55
Gas 31 49 50 50 43 26 22 20
Total 81 97 97 100 93 81 76 75
- --------------------------------------------------------------------------------
The decline in liquids production that was apparent at Elk Hills before we
took over the operation also has been stabilized. Our success in developing
sophisticated reservoir models through good geo-technical work is allowing us to
tap additional reserves to gradually ramp up production.
At the same time, our blow-down of the gas cap at Elk Hills has been very
successful. We added both pipeline and compressor capacity to accelerate
production to take full advantage of California's robust gas markets over a
period of 18 months.
It's worth emphasizing that the upward trend in liquids production clearly
demonstrates that the gas blow-down has added tremendous value without adversely
impacting liquids production as some had predicted.
34
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Oil & Gas Production Forecast
Base Production
(Thousand BOE/Day)
2002 2003 2004 2005
---- ---- ---- ----
Permian 163 167 172 175
California 124 114 111 111
Qatar 45 53 64 73
Yemen 37 44 43 40
Hugoton 27 26 25 24
Oman 15 14 13 12
Colombia 15 20 20 20
Ecuador 15 15 15 15
Russia 28 25 25 24
Pakistan 15 16 17 17
Total Base 484 494 505 511
- --------------------------------------------------------------------------------
Let's take a closer look at the data behind our production forecast.
o I've already discussed our forecast for Permian which shows production
stabilizing - followed by a modest increase through 2005.
o Like in Permian, good technical work is yielding positive results in
California with increasing liquids production at Elk Hills partially
offsetting the effects of the decline in gas production. We see overall
California production stabilizing in 2005 due to continuing development
work in the Sacramento Valley and Kern Front.
o Qatar will get a boost from the implementation of the waterflood and Phase
2 of the ISND re-development projects which are moving forward.
o Yemen will ramp up a bit next year and then begin to decline gradually.
o We expect Hugoton to taper off gradually.
o Oman will enter a period of gradual decline.
o Our estimates for Colombia assume the pipeline is operating 50 to
60-percent of the time.
35
o We expect the Ecuador base to remain flat.
o Russia should begin to taper off gradually next year.
o And we believe Pakistan will increase slightly.
o Overall, we expect our base production to grow about 2-percent per year.
36
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Oil & Gas Production Forecast
Total Production - With New Development Projects
(Thousand BOE/Day)
2002 2003 2004 2005
---- ---- ---- ----
Total Base 484 494 505 511
Horn Mountain 1 20 21 22
Ecuador -- 11 31 35
Total New 1 31 52 57
Total 485 525 557 568
- --------------------------------------------------------------------------------
As you can see, our total base production will grow from an estimated
484,000 BOE per day this year to 511,000 barrels per day in 2005.
o As the new development projects ramp up, we will see increases of up to
22,000 BOE per day from Horn Mountain - and the addition of 35,000 barrels
per day of new production from Ecuador.
o By 2005, these two projects will add a combined total of at least 57,000
barrels per day of new production.
o With the addition of these new barrels, total production will increase from
485,000 BOE per day this year to 568,000 barrels in 2005. That represents a
growth rate of about 5 1/2-percent per year over three years.
37
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Oil & Gas Production Forecast
Thousand BOE/Day
[the following is a tabular representation of graphical materials]
2001 2002 2003 2004 2005
United States 314 315 327 329 332
Middle East 88 97 111 120 125
Latin America 31 30 46 66 70
Other 43 43 41 42 41
Total 476 485 525 557 568
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This chart shows our production forecast by region.
o Our U.S. production will grow at a modest rate.
o In the Middle East, our production will grow at a higher rate.
o Our production in Latin America also will increase significantly.
o Our other production will remain flat.
o This forecast is based on projects that are already part of our portfolio
and assumes no new projects or exploration success. If we're successful in
capturing some of the new opportunities we're pursuing, they would be added
on top of this base.
38
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Occidental's Outlook
o Occidental much stronger than in 1997
- Lowest debt in 20 years
- Highest reserves in company's history
- Production up by 21%
- Operations concentrated in large assets in three core areas
U.S. Middle East Latin America
- Oil & gas production growth forecast exceeds 5% per year
o Occidental - an attractive investment opportunity
- Strong balance sheet
- Large, stable U.S. assets
- Favorable position in Middle East
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In summary, Occidental has never been stronger and our outlook has never
looked better.
o Our total debt is the lowest it's been in 20 years.
o Our proven oil and gas reserves have grown 71-percent to the highest
level in the company's history.
o Our production has increased by 21-percent - and, as you've just seen,
our production will continue to grow based on projects that are
already a part of our portfolio.
o Our operations are focused on three core geographic areas - the U.S.,
the Middle East and Latin America.
o Our oil and gas production has grow by an average of 5-percent per
year since 1997 and our forecast projects a continuation of 5-percent
average annual growth through 2005.
o Our strong balance sheet and large, stable U.S. assets and favorable
position in the Middle East provide a solid platform to capture new
growth opportunities.
This combination of factors, when coupled with exciting new investment
prospects in the Middle East, make Occidental an attractive investment
opportunity.
39
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Occidental Petroleum Corporation
o Portions of this presentation are forward-looking and involve
risks and uncertainties that could significantly affect expected
results. Factors that could cause results to differ materially
include, but are not limited to: global commodity pricing
fluctuations for oil, gas and chemicals; competitive pricing
pressures; higher than expected costs including feedstocks; the
supply/demand considerations for Occidental's products; any
general economic recession domestically or internationally; and
not successfully completing any expansion, capital expenditure or
acquisition.
o The United States Securities and Exchange Commission permits oil
and gas companies, in their filings with the SEC, to disclose
only proved reserves demonstrated by actual production or
conclusive formation tests to be economically producible under
existing economic and operating conditions. We use certain terms
in this presentation, such as probable and possible reserves,
that the SEC's guidelines strictly prohibit us from using in
filings with the SEC. U.S. investors are urged to consider
closely the disclosure in our Form 10-K, available from us
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 from the SEC by calling 1-800-SEC-0330.
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40
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: April 9, 2002 S. P. Dominick, Jr.
--------------------------------------------------
S. P. Dominick, Jr., Vice President and Controller
(Chief Accounting and Duly Authorized Officer)