Occidental Petroleum 2001 Annual Report Download - page 56

Alaska, together with additional cash consideration. The gain on this
transaction was not significant.
On November 29, 2000, an OxyChem subsidiary purchased a 28.6-percent
interest in OxyMar, a Texas general partnership that owns the Ingleside, Texas
vinyl chloride monomer (VCM) facility operated by OxyChem. The interest was
purchased from U.S. VCM Corporation, an affiliate of Marubeni Corporation, which
continues to own a 21.4-percent interest and remains a 50-percent partner for
corporate governance purposes. Oxy Vinyls, LP (OxyVinyls) owns the remaining
50-percent interest.
On November 1, 2000, Occidental agreed to farm out a partial economic
interest in its Block 15 operations in Ecuador to Alberta Energy Company Ltd.
(AEC). AEC will earn a 40-percent interest in the block and will assume certain
capital costs through 2004. Occidental will remain the operator of Block 15. The
gain on this transaction was not significant.
On November 1, 2000, Occidental completed the sale of its Durez phenolic
resins and compounding businesses and assets to Sumitomo Bakelite Co., Ltd. The
gross proceeds of approximately $150 million from the sale will be applied to
Occidental's debt-reduction program. Manufacturing facilities included in the
sale are located in Niagara Falls, New York; Kenton, Ohio; Fort Erie, Ontario,
Canada; and Genk, Belgium, as well as OxyChem's share in joint ventures located
in Japan, Singapore, Indonesia and Canada. There was a $13 million after-tax
gain on this transaction.
On August 15, 2000, Occidental completed agreements with respect to two
transactions with Apache Corporation (Apache) involving Occidental's interests
in the Continental Shelf of the Gulf of Mexico (GOM). Occidental entered into a
transaction to deliver, over four years, substantially all of its share of
future gas production from these GOM interests to Apache for approximately $280
million. Occidental also agreed to sell an interest in the subsidiary that holds
the GOM assets for approximately $62 million, with an option for Apache to
purchase additional interests for $44 million over the next four years. As a
result of these transactions, and the consequent elimination of a portion of
Occidental's responsibility for abandonment liabilities, Occidental recorded an
after-tax gain of $39 million.
On May 8, 2000, Occidental completed an agreement to sell its producing
properties in Peru to Pluspetrol. In connection with this transaction,
Occidental recorded an after-tax charge of approximately $29 million in December
1999 to write-down the properties to their fair values.
On April 24, 2000, Occidental completed the acquisition of ARCO Long Beach
Inc. (THUMS), an oil producing entity, for approximately $68 million.
On April 19, 2000, Occidental completed its acquisition of all of the
common interest in Altura Energy Ltd. (Altura) (now "Occidental Permian Ltd."),
the largest oil producer in Texas. Occidental, through its subsidiaries, paid
approximately $1.2 billion to the sellers, affiliates of BP Amoco plc and Shell
Oil Company, to acquire the common limited partnership interest and control of
the general partner which manages, operates and controls 100 percent of the
Altura assets. The partnership borrowed approximately $2.4 billion, which had
recourse only to the Altura assets. The partnership also loaned approximately
$2.0 billion to affiliates of the sellers, evidenced by two notes recorded as
long-term receivables, which provide credit support to the partnership. The
sellers retained a preferred limited partnership interest of approximately $2.0
billion and are entitled to certain distributions from the partnership. The
acquisition is valued at approximately $3.6 billion. Occidental's results of
operations include the operations of the Altura assets from the date of
acquisition. Pro-forma net income for the year ended December 31, 2000,
including historical Altura results as if the acquisition had occurred on
January 1, 2000, would have been $1.6 billion ($4.47 earnings per share).
Pro-forma net income for the year ended December 31, 1999, including historical
Altura results as if the acquisition had occurred on January 1, 1999, would have
been $601 million ($1.69 earnings per share). Pro-forma revenues would have been
$14.9 billion and $9.4 billion for the year ended December 31, 2000, and 1999,
respectively. The pro-forma calculations were made with historical operating
results from Altura prior to ownership by Occidental and give effect to certain
adjustments, including increased depreciation, depletion and amortization to
reflect the value assigned to the Altura property, plant and equipment,
increased interest expense, and income tax effects. The pro-forma results are
not necessarily indicative of the results of operations that would have occurred
if the acquisition had been made at the beginning of the periods presented or
that may be obtained in the future. Also, the pro-forma calculations do not
reflect anticipated cost savings, synergies, changes in realized prices or
production rates and certain other adjustments that are expected to result from
the acquisition and operation of Altura.