Occidental Petroleum 2008 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2008 Occidental Petroleum annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

SUPPLEMENTAL CASH FLOW INFORMATION
Taxes paid were as follows:
For the years ended December 31, (in millions) 2008 2007 2006
U.S. income taxes from continuing operations $1,889 $1,386 $1,542
Foreign income taxes from continuing operations 2,617 2,116 1,711
Total income taxes from continuing operations $4,506 $3,502 $3,253
Net cash payments for federal, state and foreign income paid by discontinued
operations $ 7 $17 $102
Production taxes $341 $244 $214
Property and other taxes $249 $219 $268
Interest paid totaled approximately $84 million, $307 million and $266 million for the years 2008, 2007 and 2006, respectively. See
Note 2 for detail of noncash investing and financing activities regarding certain acquisitions.
FOREIGN CURRENCY TRANSACTIONS
The functional currency applicable to all of Occidental’s foreign oil and gas operations is the U.S. dollar since cash flows are
denominated principally in U.S. dollars. Occidental’s chemical operations in Brazil use the Real as the functional currency. Exchange-rate
changes on transactions denominated in non-U.S. dollar functional currencies generated a gain of $91 million in 2008 and losses of $18
million and zero in 2007 and 2006, respectively.
NOTE 2 BUSINESS COMBINATIONS AND ASSET ACQUISITIONS AND DISPOSITIONS
2008
In February 2008, Occidental purchased from Plains Exploration & Production Company (Plains) a 50-percent interest in oil and gas
properties in the Permian Basin and western Colorado for approximately $1.5 billion in cash. In December 2008, Occidental purchased the
remainder of Plains’ interests in the same assets for $1.2 billion in cash.
In June 2008, Occidental signed an agreement for a third party to construct a west Texas gas processing plant and pipeline
infrastructure that will provide carbon dioxide (CO 2) for Occidental’s enhanced oil recovery projects in the Permian Basin. Occidental will
own and operate the new facility and pipeline system.
In June 2008, Occidental and its partner signed 30-year agreements (including a potential 5-year extension) with the Libyan National
Oil Company (NOC) to upgrade its existing petroleum contracts in Libya. The new agreements increased Occidental's after-tax economic
returns while allowing NOC and Occidental to design and implement major field redevelopment and exploration programs in the Sirte
Basin. Occidental will contribute 37.5 percent of the development capital. Under these contracts, Occidental will pay $750 million as its share
of a signature bonus. Occidental made its first payment in the amount of $450 million in June 2008. Occidental's remaining annual
payments of $150 million each, are due in each of the next two years.
In July 2008, Occidental purchased a 15-percent interest in the Joslyn Oil Sands Project (Joslyn) in northern Alberta, Canada, for
approximately $500 million in cash.
In August 2008, Occidental purchased a minority interest in a North American oil and gas pipeline entity for approximately $330
million in cash.
In October 2008, Occidental announced the signing of the preliminary agreement with Abu Dhabi National Oil Company to appraise
and develop the Jarn Yaphour and Ramhan oil and gas fields in the Emirate of Abu Dhabi. Occidental will operate both fields and hold a 100-
percent interest in the newly created concessions.
2007
In January 2007, Occidental sold its 50-percent joint venture interest in Russia for an after-tax gain of approximately $412 million.
In June 2007, Occidental completed a fair value exchange under which BP p.l.c. (BP) acquired Occidental's oil and gas interests in
Horn Mountain and received cash. Occidental acquired oil and gas interests in the Permian Basin and a gas processing plant in Texas from
BP. Occidental also purchased for cash BP's west Texas pipeline system and, in a separate transaction, Occidental sold its oil and gas
interests in Pakistan to BP. As a result of these transactions, both the Horn Mountain and Pakistan operations were classified as
discontinued operations for all periods presented. Net revenues and pre-tax income for discontinued operations related to Pakistan and Horn
Mountain were $193 million and $469 million (including after-tax disposal gains of $230 million) in 2007 and $486 million and $359
million in 2006. The assets and liabilities of Horn Mountain and Pakistan are classified as assets of discontinued operations and liabilities of
discontinued operations on the consolidated balance sheet. At December 31, 2006, asset and liabilities of discontinued operations related to
Horn Mountain and Pakistan were $162 million and $14 million, respectively, which were mainly comprised of PP&E and asset retirement
obligations.
In September 2007, Occidental sold exploration properties in West Africa and recorded a pre-tax gain of $103 million.
47
2006