Occidental Petroleum 2002 Annual Report Download - page 11

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CHEMICAL
Occidental manufactures and markets basic chemicals, vinyls and performance
chemicals directly and through various affiliates (collectively, OxyChem).
OxyChem focuses on the chlorovinyls chain where it begins with chlorine, which
is co-produced with caustic soda, and then converts chlorine and ethylene,
through a series of intermediate products, into PVC.
In August 2002, Occidental and Lyondell Chemical Company completed an
agreement for Occidental to sell its 29.5-percent share of Equistar to Lyondell
and to purchase a 21-percent equity interest in Lyondell. Occidental entered
into these transactions to diversify its petrochemicals interest. These
transactions reduced Occidental's direct exposure to petrochemicals volatility,
yet allowed it to maintain a presence and preserve, through its Lyondell
investment, an economic upside when the petrochemicals industry recovers.
9
CORPORATE
In July 2001, Occidental sold its interests in a subsidiary that owned a
Texas intrastate pipeline system and its interest in a liquefied natural gas
(LNG) project in Indonesia. After-tax proceeds of approximately $750 million
from these transactions were used to reduce debt.
In April 2000, Occidental sold its interest in Canadian Occidental
Petroleum Ltd., renamed Nexen Inc. (CanadianOxy or Nexen). After-tax proceeds,
together with tax benefits from the disposition of oil-producing properties in
Peru at the same time, totaling $700 million were used to reduce debt following
the Altura acquisition.
DEBT STRUCTURE
The components of Occidental's total debt are shown in the table below
(amounts in millions):
Other
Occidental Recourse Total
Date Debt Debt (a) Debt (a)
==================== ========== ========== ==========
12/31/98 $ 5,382 $ 776 $ 6,158
12/31/99 $ 4,380 $ 1,047 $ 5,427
12/31/00 $ 5,441 $ 913 $ 6,354
12/31/01 $ 4,119 $ 771 $ 4,890
12/31/02 $ 4,203 $ 556 $ 4,759
-------------------- ---------- ---------- ----------
(a) Includes Trust Preferred Securities, natural gas delivery commitment (which
was terminated in 2002), corporate and subsidiary preferred stock and
capital lease obligations.
Occidental's year-end 2002 total debt-to-capitalization ratio has declined
to approximately 43 percent from the 66-percent level that existed at the end of
1998, as shown in the table below. The debt-to-capitalization ratio is computed
by dividing total debt by total capitalization.
Total Debt/Capitalization Ratio (%)
-----------------------------------
Date Total Debt/Capitalization Ratio
==================== ===============================