Occidental Petroleum 2008 Annual Report Download - page 32

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Exploration expense decreased in 2008, compared to 2007, due to decreases in Colombia and Middle East/North Africa. The 2007
amount included expenses for exploration properties in West Africa, which were sold in the third quarter of 2007.
Exploration expense increased in 2007, compared to 2006, due to increases in the Colombia and Middle East/North Africa exploration
programs and impairments in California.
Interest and debt expense in 2007 and 2006 included pre-tax debt repayment expenses of $167 million and $35 million, respectively.
Excluding the effect of the 2007 debt repayment charges, interest expense decreased in 2008, compared to 2007, due to lower average debt
levels and lower effective interest rates.
Selected Other Items
In millions 2008 2007 2006
Provision for income taxes $4,629 $3,507 $3,354
Income from equity investments $(213)$(82)$(183)
Discontinued operations, net $18 $322 $(11)
The increase in the provision for income taxes in 2008, compared to 2007, was due to higher income before taxes in 2008. The 2008
worldwide effective tax rate was comparable to 2007.
The increase in the provision for income taxes in 2007, compared to 2006, was due to higher income before taxes in 2007.
The increase in income from equity investments in 2008, compared to 2007, was due to higher income from the Dolphin Pipeline.
The decrease in income from equity investments in 2007, compared to 2006, was due to the sale of Occidental’s interest in Lyondell
and a Russian joint venture.
Discontinued operations in 2007 included after-tax income of $326 million for the operations of Horn Mountain and Pakistan that were
sold as part of a series of transactions with BP as well as the results of operations of these assets before disposal.
Discontinued operations in 2006 included a $296 million after-tax loss for Ecuador after Occidental's contract for its Block 15
operations was terminated in May 2006. The 2006 amount also included $285 million of after-tax income for the operations of Horn
Mountain and Pakistan as well as the Vintage assets that were held for sale and subsequently sold in 2006.
CONSOLIDATED ANALYSIS OF FINANCIAL POSITION
The changes in the following components of Occidental’s balance sheet are discussed below:
Selected Balance Sheet Components
In millions 2008 2007
CURRENT ASSETS
Cash and cash equivalents $1,777 $1,964
Trade receivables, net 3,117 4,973
Marketing and trading assets and other 1,012 416
Inventories 958 910
Prepaid expenses and other 308 332
Total current assets $7,172 $8,595
Investments in unconsolidated entities $1,263 $783
Property, plant and equipment, net $32,266 $26,278
Long-term receivables and other assets, net $836 $863
CURRENT LIABILITIES
Current maturities of long-term debt and
notes payable $698 $47
Accounts payable 3,306 4,263
Accrued liabilities 1,861 1,611
Domestic and foreign income taxes 158 227
Liabilities of discontinued operations 111 118
Total current liabilities $6,134 $6,266
Long-term debt, net $2,049 $1,741
Deferred credits and other liabilities-income taxes $2,660 $2,324
Deferred credits and other liabilities-other $3,217 $3,156
Long-term liabilities of discontinued operations $152 $174
Stockholders’ equity $27,300 $22,823
Assets
See "Liquidity and Capital Resources — Cash Flow Analysis" for discussion about the change in cash and cash equivalents.
The decrease in trade receivables, net was due to lower oil and natural gas prices offset slightly by higher volumes during the fourth
quarter of 2008, compared to the fourth quarter of 2007. The increase in marketing and trading assets and other was attributable to fair value
adjustments on derivatives and increases of federal tax and joint venture receivables. The increase in investments in unconsolidated entities
reflected the 2008 minority interest acquisitions in a North American oil and gas pipeline entity and a gas processing plant and pipeline and
the increase in equity income from the Dolphin Project pipeline investment.
The increase in property, plant and equipment, net was due to capital expenditures, the purchases of oil and gas interests from Plains
and an interest in Joslyn, the Libya signature bonus and the acquisitions of other various oil and gas interests, partially offset by 2008
DD&A.
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