Occidental Petroleum 2001 Annual Report Download - page 57

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46
On April 18, 2000, Occidental completed the sale of its 29.2-percent stake
in Canadian Occidental Petroleum Ltd. (CanadianOxy) for gross proceeds of
approximately $1.2 billion Canadian, following approval of the sale by
CanadianOxy stockholders. Of Occidental's 40.2 million shares of CanadianOxy,
20.2 million were sold to the Ontario Teachers Pension Plan Board and 20 million
to CanadianOxy. These sales resulted in a net pre-tax gain of approximately $493
million. In addition, Occidental and CanadianOxy sold their respective
15-percent interests in joint businesses of approximately equal value, resulting
in Occidental owning 100 percent of an oil and gas operation in Ecuador and
CanadianOxy owning 100 percent of sodium chlorate operations in Canada and
Louisiana.
1999
In December 1999, Occidental and EOG Resources, Inc. (EOG) exchanged
certain oil and gas assets. Occidental received assets that will enhance its
programs to further focus exploration and production activities and achieve cost
savings through operational benefits. Occidental received producing properties
and exploration acreage in its expanding California asset base, as well as
producing properties in the western Gulf of Mexico near existing operations in
exchange for oil and gas production and reserves in east Texas. Occidental also
farmed out Oklahoma panhandle properties to EOG and retained a carried interest.
In the third quarter of 1999, pursuant to a series of transactions,
Occidental indirectly acquired the remaining ownership of INDSPEC Chemical
Corporation (INDSPEC) through the issuance of approximately 3.2 million shares
of Occidental common stock at an estimated value of approximately $68 million
and the assumption of approximately $80 million of bank debt. As a result of the
transactions, Occidental owns 100 percent of the stock of INDSPEC, which is a
leading manufacturer of resorcinol, a bonding agent principally used in tires
and as a flame retardant.
In the third quarter of 1999, Occidental acquired Unocal International
Corporation's (UNOCAL) oil and gas interests in Yemen and UNOCAL acquired
Occidental's properties in Bangladesh. The results, after tax benefits, did not
have a significant impact on earnings.
Effective April 30, 1999, Occidental and The Geon Company (now known as
"PolyOne") formed two partnerships. Occidental has a 76-percent interest in the
polyvinyl chloride (PVC) commodity resin partnership, OxyVinyls, which is the
larger of the partnerships, and a 10-percent interest in a PVC powder
compounding partnership. OxyVinyls also has entered into long-term agreements to
supply PVC resin to PolyOne and VCM to Occidental and PolyOne. In addition, as
part of the transaction, Occidental sold its pellet compounding plant in
Pasadena, Texas and its vinyl film assets in Burlington, New Jersey to PolyOne.
As part of the transaction, PolyOne received approximately $104 million through
the retention of working capital and the distribution of cash from OxyVinyls,
and OxyVinyls undertook approximately $180 million in obligations for certain
PolyOne plant facilities, which are treated as operating leases for accounting
purposes. Occidental did not record a significant gain or loss on the
transaction.
NOTE 4 ASSET WRITE-DOWNS, EXTRAORDINARY ITEMS AND ACCOUNTING CHANGES
--------------------------------------------------------------------------------
2001
In January 2002, Occidental and Lyondell Chemical Company (Lyondell)
agreed, in principle, for Occidental to sell its share of Equistar to Lyondell
and to purchase an equity interest of approximately 21 percent in Lyondell.
These transactions are subject to the execution of definitive documents and
corporate and regulatory approvals. In connection with the agreement in
principle, Occidental wrote down its investment in the Equistar partnership by
$240 million, after tax, in December 2001. The transactions are expected to
close in the second quarter of 2002.
In December 2001, Occidental issued $300 million of 5.875-percent senior
notes due 2007 and $500 million of 6.750-percent senior notes due 2012 for net
combined proceeds of approximately $794 million. Approximately $700 million of
the net proceeds were used to extinguish the Altura non-recourse debt.
Occidental recorded an after-tax extraordinary loss of $4 million from this
transaction.
On March 5, 2001, Occidental retired $20.5 million of 7.8-percent pollution