Occidental Petroleum 2003 Annual Report Download - page 89

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reserves, net of royalties. Future development and production costs were
computed by applying year-end costs to be incurred in producing and further
developing the proved reserves. Future income tax expenses were computed by
applying, generally, year-end statutory tax rates (adjusted for permanent
differences, tax credits, allowances and foreign income repatriation
considerations) to the estimated net future pre-tax cash flows. The discount was
computed by application of a 10 percent discount factor. The calculations
assumed the continuation of existing economic, operating and contractual
conditions at each of December 31, 2003, 2002 and 2001. However, such arbitrary
assumptions have not necessarily proven to be the case in the past. Other
assumptions of equal validity would give rise to substantially different
results.
The year-end prices used to calculate future cash flows vary by producing
area and market conditions. For the 2003, 2002 and 2001 disclosures, the West
Texas Intermediate oil prices used were $32.52/bbl, $31.17/bbl and $19.84/bbl,
respectively. The Henry Hub gas prices used for the 2003, 2002 and 2001
disclosures were $5.79/MMBtu, $4.75/MMBtu and $2.57/MMBtu, respectively.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
In millions
Consolidated Subsidiaries
-------------------------------------------------------------------
Other
United Latin Middle Eastern Other
States America East Hemisphere Total Interests(a)
=========================================== ========== ========= ========= ========== ========= =========
AT DECEMBER 31, 2003
Future cash flows $ 53,939 $ 3,977 $ 10,232 $ 556 $ 68,704 $ 987
Future costs
Production costs and other operating
expenses (22,584) (1,404) (2,945) (112) (27,045) (434)
Development costs (b) (1,931) (129) (1,382) (39) (3,481) (87)
---------- --------- --------- ---------- --------- ---------
FUTURE NET CASH FLOWS BEFORE INCOME TAXES 29,424 2,444 5,905 405 38,178 466
Future income tax expense (9,090) (1,070) (626) (169) (10,955) (141)
---------- --------- --------- ---------- --------- ---------
FUTURE NET CASH FLOWS 20,334 1,374 5,279 236 27,223 325
Ten percent discount factor (11,644) (355) (2,390) (47) (14,436) (81)
---------- --------- --------- ---------- --------- ---------
STANDARDIZED MEASURE $ 8,690 $ 1,019 $ 2,889 $ 189 $ 12,787 $ 244
=========================================== ========== ========= ========= ========== ========= =========
AT DECEMBER 31, 2002
Future cash flows $ 46,806 $ 3,407 $ 8,555 $ 628 $ 59,396 $ 429
Future costs
Production costs and other operating
expenses (18,288) (907) (2,227) (102) (21,524) (286)
Development costs (b) (1,997) (165) (969) (28) (3,159) (40)
---------- --------- --------- ---------- --------- ---------
FUTURE NET CASH FLOWS BEFORE INCOME TAXES 26,521 2,335 5,359 498 34,713 103
Future income tax expense (7,929) (906) (333) (190) (9,358) --
---------- --------- --------- ---------- --------- ---------
FUTURE NET CASH FLOWS 18,592 1,429 5,026 308 25,355 103
Ten percent discount factor (10,342) (440) (2,079) (65) (12,926) (22)
---------- --------- --------- ---------- --------- ---------
STANDARDIZED MEASURE $ 8,250 $ 989 $ 2,947 $ 243 $ 12,429 $ 81
=========================================== ========== ========= ========= ========== ========= =========
AT DECEMBER 31, 2001
Future cash flows $ 28,146 $ 2,259 $ 5,670 $ 340 $ 36,415 $ 469
Future costs
Production costs and other operating
expenses (14,404) (868) (1,813) (69) (17,154) (321)
Development costs (b) (2,282) (204) (556) (19) (3,061) (32)
---------- --------- --------- ---------- --------- ---------
FUTURE NET CASH FLOWS BEFORE INCOME TAXES 11,460 1,187 3,301 252 16,200 116
Future income tax expense (2,224) (483) (306) (90) (3,103) (26)
---------- --------- --------- ---------- --------- ---------
FUTURE NET CASH FLOWS 9,236 704 2,995 162 13,097 90
Ten percent discount factor (5,088) (199) (1,238) (38) (6,563) (22)
---------- --------- --------- ---------- --------- ---------
STANDARDIZED MEASURE $ 4,148 $ 505 $ 1,757 $ 124 $ 6,534 $ 68
=========================================== ========== ========= ========= ========== ========= =========
(a) Includes future net cash flows applicable to equity investees in Russia and
Yemen, partially offset by minority interests for a Colombian affiliate.
(b) Includes dismantlement and abandonment costs.
73
CHANGES IN THE STANDARDIZED MEASURE OF DISCOUNTED FUTURE
NET CASH FLOWS FROM PROVED RESERVE QUANTITIES
In millions
For the years ended December 31, 2003 2002 2001