Occidental Petroleum 2006 Annual Report Download - page 11
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ITEM 6 SELECTED FINANCIAL DATA
Five-Year Summary of Selected Financial Data
ITEM 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(MD&A) (Incorporating Item 7A)
In this report, the term "Occidental" refers to Occidental Petroleum Corporation (OPC) and/or one or more entities in which it owns a majority
voting interest (subsidiaries). Occidental’s business is divided into two segments conducted through oil and gas subsidiaries and their affiliates
and chemical subsidiaries and their affiliates (OxyChem).
General
Occidental aims to generate superior total returns to stockholders using the following strategy:
ØFocus on large, long-lived oil and gas assets with long-term growth potential;
ØMaintain financial discipline and a strong balance sheet; and
ØManage the chemical segment to provide cash in excess of normal capital expenditures.
Occidental prefers to own large, long-lived "legacy" oil and gas assets, like those in California and the Permian Basin, that tend to have
moderate decline rates, enhanced secondary and tertiary recovery opportunities and economies of scale that lead to cost-effective production.
Management expects such assets to contribute substantially to earnings and cash flow after invested capital.
At Occidental, maintaining financial discipline means investing capital in projects that management expects will generate above-cost-of-capital
returns throughout the business cycle. During periods of high commodity prices, Occidental expects to use most of its cash flow after capital
expenditures and dividends to improve the potential for future earnings by making such investments.
The chemical business is not managed with a growth strategy. Capital is expended to operate the chemical business in a safe and
environmentally sound way, to sustain production capacity and to focus on projects
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