Occidental Petroleum 2002 Annual Report Download - page 62

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Current $ 164 $ 116
Non-current 157 120
---------- ----------
$ 321 $ 236
======================================================= ========== ==========
Derivative financial instrument liabilities (a)
Current $ 115 $ 102
Non-current 23 119
---------- ----------
$ 138 $ 221
======================================================= ========== ==========
(a) Amounts include energy-trading contracts
45
As a result of fair-value swaps, the amount of interest expense recorded in
the income statement is lower by approximately $45 million and $7 million for
the years ended December 31, 2002 and 2001, respectively.
The following table summarizes after-tax derivative activity recorded in
OCI (in millions):
Balance at December 31, 2002 2001
================================================================= ========== ==========
Beginning Balance $ (20) $ --
Cumulative effect of change in accounting principle -- (27)
(Losses) gains from changes in current cash flow hedges (14) 11
Amount reclassified to income 8 (4)
---------- ----------
Ending Balance $ (26) $ (20)
================================================================= ========== ==========
During the years ended December 31, 2002 and 2001, an $8 million after-tax
loss and a $4 million after-tax gain, respectively, were reclassified from OCI
into earnings, resulting from the expiration of cash-flow hedges when the hedged
transactions closed. During the years ended December 31, 2002 and 2001, a net
unrealized after-tax loss of $14 million and a net unrealized after-tax gain of
$11 million, respectively, were recorded to OCI relating to changes in current
cash-flow hedges. During the next twelve months, Occidental expects that $3
million of net derivative after-tax losses included in OCI, based on their
valuation at December 31, 2002, will be reclassified into earnings when the
hedged transactions close. Hedge ineffectiveness did not have a significant
impact on earnings for the years ended December 31, 2002 and 2001.
NOTE 3 BUSINESS COMBINATIONS AND ASSET ACQUISITIONS AND DISPOSITIONS
--------------------------------------------------------------------------------
2002
In November 2002, Occidental closed a transaction with the United Arab
Emirates' (UAE) Offsets Group in which Occidental acquired a 24.5 percent
interest in Dolphin Energy Limited (DEL), the operator of the Dolphin Project,
for a total of $342 million. DEL is a company that also includes as shareholders
the UAE Offsets Group (51 percent interest) and TotalFinaElf (24.5 percent
interest). The amount has been allocated, on a preliminary basis, primarily to
investment in unconsolidated entities. Occidental will also be responsible for
its 24.5 percent share of costs on an ongoing basis. The Dolphin Project, which
is expected to cost its owners $3.5 billion in total, consists of two parts: (1)
a development and production sharing agreement with Qatar to develop and produce
natural gas and condensate in Qatar's North Field; and (2) the rights for DEL to
build, own and operate a 260-mile-long, 48-inch export pipeline to transport 2
billion cubic feet per day of dry natural gas from Qatar to markets in the UAE
for a period of 25 years. The pipeline will have capacity to transport up to 3.2
billion cubic feet per day, which will allow for additional business development
projects. DEL is currently negotiating contracts to market the gas with users in