Occidental Petroleum 2006 Annual Report Download - page 59

NOTE 2 BUSINESS COMBINATIONS AND ASSET ACQUISITIONS AND DISPOSITIONS

In January 2006, Occidental completed the merger of Vintage into a wholly-owned Occidental subsidiary. As a result, Occidental acquired
assets in Argentina, California, Yemen, Bolivia and the Permian Basin in Texas. Occidental paid approximately $1.3 billion in cash to former
Vintage shareholders, issued approximately 56 million shares of Occidental common stock, which were valued at $2.1 billion, and assumed
Vintage’s debt, which had an estimated fair market value of $585 million at closing. Occidental believes that the merger provides significant
growth opportunities represented by Vintage’s assets in Argentina, California and Yemen, all of which will complement and enhance Occidental’s
current operations and production.
The acquisition was accounted for in accordance with SFAS No. 141, “Business Combinations.” The results of Vintage’s operations have been
included in the consolidated financial statements since January 30, 2006. The assets acquired and liabilities assumed were recorded at their
estimated fair values at the acquisition date. The estimated fair value of PP&E consisted of $3.4 billion of proved properties and $1.3 billion of
unproved properties. No goodwill was recorded on this transaction. The following table summarizes the allocation of the purchase price to Vintage’s
assets and liabilities:
 
  
 
 
 
 
 
 
 
 
 
 
 
Certain Vintage assets and their related liabilities were classified as held for sale as part of the allocation of the purchase price as Occidental
intended at the time of acquisition to divest these assets. The results of operations for the assets that were held for sale and sold are not included in
the revenue, cost or production amounts and were treated as discontinued operations as Occidental did not expect to generate any significant cash
flows from, or have any continuing involvement with, the activities of these Vintage assets. During 2006, Occidental divested these assets for
approximately $1.0 billion and recorded no gain or loss on these sales. On the December 31, 2006, consolidated balance sheet, the assets of
discontinued operations amount includes approximately $22 million of the remaining amount of PP&E that is being held for sale and the liabilities
of discontinued operations includes $4 million of liabilities held for sale. Net revenues and pre-tax income for discontinued operations related to
these Vintage assets for the year ended December 31, 2006, were $869 million and $237 million, respectively.
The following unaudited pro forma summary presents the consolidated results of operations as if the acquisition of Vintage had occurred at the
beginning of each year:
  

  
  
  
  
The unaudited pro forma data presented above use estimates and assumptions based on information currently available, and are not
necessarily indicative of the results of operations of Occidental that would have occurred had such acquisition actually been consummated as of
the beginning of the years presented, nor are they necessarily indicative of future results of operations.
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